BUSINESS BEFORE QUESTIONS

Canterbury City Council Bill

Motion made, That the Bill be now read the Third time.

Hon. Members: Object.
	 Bill to be read the Third time on Thursday 14 January at  Three o'clock.

Nottingham City Council Bill

Motion made, That the Bill be now read the Third time.

Hon. Members: Object.
	 Bill to be read the Third time on Thursday 14 January at  Three o'clock.

Bournemouth Borough Council Bill [ Lords]

Motion made, That the Bill, as amended, be now considered.

Hon. Members: Object.
	 Bill to be considered on Thursday 14 January.

Manchester City Council Bill [ Lords]

Motion made, That the Bill, as amended, be now considered.

Hon. Members: Object.
	 Bill to be considered on Thursday 14 January.

Leeds City Council Bill ( By Order)

Motion made, That the Bill, as amended, be now considered.

Hon. Members: Object.
	 Bill to be considered on Thursday 14 January.

Reading Borough Council Bill ( By Order)

Motion made, That the Bill, as amended, be now considered.

Hon. Members: Object.
	 Bill to be considered on Thursday 14 January.

ORAL ANSWERS TO QUESTIONS

ENERGY AND CLIMATE CHANGE

The Secretary of State was asked-

Greenhouse Gas Emissions (Aircraft)

Graham Allen: Whether his Department has made an assessment of the effects on greenhouse gas emissions of the temporary grounding of aircraft following the terrorist attacks in New York and Washington DC on 11 September 2001.

Joan Ruddock: The Department has not made an assessment of the effects on greenhouse gas emissions of the temporary grounding of aircraft following the terrorist attacks in New York and Washington DC on 11 September 2001.

Graham Allen: When all air traffic in the western world was grounded after the 9/11 incident, within three days the global temperature change was 1°, and when traffic resumed it went back by 1°. Is not that a very significant scientific statement? Will my hon. Friend ensure that the Department looks into why this happened, and the impact that it should have on our future policies? I asked this question of her predecessor five years ago, and I would appreciate an answer.

Joan Ruddock: I am grateful to my hon. Friend-and it has not taken me five years to dream up an answer. First, this is not a question of greenhouse gases. The scientific interest that followed the grounding of the aircraft was do with the issue of contrails, which are the evaporation and condensation trails emitted by aircraft. We do not know the science of contrails very clearly, but there are two possible effects: first, that they reflect radiation back beyond the earth, and therefore have a cooling effect-or, secondly, that they become cirrus clouds and trap radiation, and therefore have a warming effect. The phenomenon that was observed was thought possibly to be due to the absence of contrails leading to a heating effect. However, the Department has followed subsequent studies, and we now believe that there is no evidence that contrails, or the lack of them, were responsible for the temperature rise observed at the time, and that it was a natural fluctuation.

Carbon Capture and Storage

Michael Fabricant: What his most recent assessment is of progress in the competition to build a commercial scale carbon capture and storage power plant in the UK; and if he will make a statement.

Edward Miliband: We are currently evaluating two bids to select, which will receive funding from the £90 million set aside for the front-end engineering and design stage, with the result to be announced shortly. This is one of the four demonstration projects to which we are committed, funded by the levy for carbon capture and storage under the Energy Bill, which will ensure the largest investment in CCS of any country in the world.

Michael Fabricant: I am grateful to the Secretary of State for his answer. He recognises, as does the whole House, the importance of this work in creating jobs, apart from anything else. However, he will also know that we have fallen behind China, Australia, Canada, Germany, Norway and Belgium because we have been so late in developing this technology. When are we going to start doing something?

Edward Miliband: This is a line that the Opposition like to peddle, but it is absolutely untrue. One need only look at what has happened since 2007. We have had the pre-qualification phase and the application phase for these projects. Hundreds of pages of applications have come into our Department and are being scrutinised, as one would expect in any procurement project. We have a CCS levy before this House; we have agreement in Europe for up to 12 demonstration projects, pushed by the United Kingdom; we have a commitment in this country to four demonstration projects, which we have not had before; and we have legislation in the Energy Bill for the storage of carbon dioxide from CCS projects. We are making progress. Indeed, there is as yet no post-combustion project in the world on the scale that we are talking about in this country.

Paddy Tipping: The Secretary of State will know that burning coal cleanly is important both in his constituency and in mine. He will also know that there are plans to extend that process at Harworth colliery, but a loan from the European Investment Bank cannot be made until a guarantee of clean coal technology is available for that coal. What can he do to help the men at Harworth?

Edward Miliband: As my hon. Friend will be aware, we have been in touch with the European Investment Bank and continue to have dialogue with it about these matters, including the specific issue that he mentions. As we look forward to carbon capture and storage in this country, it is important to say that there is also a role for indigenous coal. My Department is very clear about that, and we do all we can, working with others, to support that process.

Charles Hendry: The Secretary of State's fellow Ministers have heard the evidence given to the Public Bill Committee on the Energy Bill this week, with people describing the need for regulatory certainty if we are going to get investment in this new technology. Industry and environmental groups all agree that the terms for investment must be set for decades, not just the next few years, so will the Secretary of State agree that the Government should now take powers to set an emissions performance standard for a maximum level of emissions for new fossil fuel plant, as proposed by ourselves, the Liberal Democrats, many of his own parliamentary colleagues and many outside, to provide that regulatory certainty and show a real commitment to a low-carbon economy?

Edward Miliband: Obviously, we will look at any proposals that come forward, but I say to the hon. Gentleman-perhaps he has not followed the matter as closely as he might have done-that we have unveiled the most environmentally stringent conditions for new coal-fired power stations of any country in the world. We consulted on them and we have now put them into national policy statements. The proposals have been widely welcomed, both by the green groups that he mentions and by energy companies, as striking the right balance. A plant-level emissions standard could also have a role. As I understand it, the Environment Agency already has powers to introduce one, but we will examine any proposals that come forward.

Brian Iddon: Does my right hon. Friend agree that pre-combustion carbon capture has the advantage of producing chemicals, especially hydrogen, and that we ought to encourage commercial interests in that area as well as in post-combustion carbon capture? Has he had any negotiations with BP, which pulled out of the Peterhead experiment?

Edward Miliband: I think I am right in saying that the Peterhead proposal was for a gas-fired power station. Our concentration in spending significant amounts of money has been on coal-fired power stations. However, my hon. Friend is right to say that pre-combustion has an important role. We have said that of the four demonstration projects up to two will be pre-combustion, precisely because we recognise the importance of that technology. It is important to say that as we spend a significant sum on carbon capture and storage-as I said, it is the largest sum spent by any country in the world-we need to test all the technologies to drive it forward, including pre-combustion.

Michael Weir: In evidence to the Public Bill Committee on the Energy Bill, some witnesses have suggested that the 2014 target of having a demonstrator up and working is just one of the conditions and may be allowed to slip. Can the Secretary of State assure us that it will be a principal condition that the demonstrator must be up and working by 2014?

Edward Miliband: As I think I have said in previous answers on this matter, that was set out as one of the conditions for the demonstration project and remains one of the conditions, and we are certainly considering that closely as we consider the bids that have been put forward.

Fuel Inefficiency

Danny Alexander: What recent assessment he has made of the contribution of fuel inefficiency to fuel poverty.

Edward Miliband: Fuel poverty is caused by three factors: incomes, prices and household energy efficiency. We are acting on all three, including through higher winter fuel and cold weather payments this winter, and through compulsory help with bills for the most vulnerable, which is being legislated for in the current Energy Bill. In the pre-Budget report, an extra £150 million was provided for the Warm Front programme next year, building on the 2 million households helped in the last decade.

Danny Alexander: I am grateful to the Secretary of State for that answer, but he will know that, especially in cold spells such as the recent one, it is those in the most energy-inefficient homes, which tend to be the hardest to treat, and those who use expensive sources of heating off the gas grid such as heating oil and liquefied petroleum gas, who suffer most. Despite the warm words about such homes and about the people who use those energy sources, precious little has been done to warm them up. They tend to come at the end of the queue. What can the right hon. Gentleman say to assure me that in future, people in hard-to-treat homes off the gas grid will come at the front of the queue?

Edward Miliband: I recognise that that is an issue to consider throughout the country, including in the hon. Gentleman's constituency, and I shall try to explain our strategy to him. First, we have said that social price support will be focused on electricity bills, to ensure that everyone gets the benefit of it, not just those on the gas grid. Secondly, we have recently increased the amount that poor households off the gas grid can get under Warm Front to a £6,000 maximum grant for oil-based or renewable heating systems. Thirdly, the renewable heat incentive is being introduced, precisely to encourage the take-up of different forms of heating by those who are not on the gas grid, and fourthly, the community energy-saving programme will work in rural areas to see what can be done to provide whole-house efficiency. There is more that we can do, but we are trying to make a difference to the households that are difficult to reach.

David Drew: Will my right hon. Friend say something about the current Warm Front funding, and how long it is taking individual households, particularly those that do not have central heating or whose boilers have been condemned, to get action? There seems to be some concern that it is taking up to six months. In this weather, that is six months too long.

Edward Miliband: My hon. Friend asks an important question. The amount of money allocated to the Warm Front programme was due to fall next year. Thanks to the Chancellor-in tough times-making the decision to allocate another £150 million to it, the amount of Warm Front money will be significantly enhanced next year. That should help with some of the queuing issues to which my hon. Friend refers. Warm Front is a very popular programme-lots of households want to take advantage of it-and it is good that the Chancellor recognises both its importance and its success, and has provided more resources for it.

Simon Hughes: Now that we have reached the 13th, and coldest, winter of this Labour Government, what excuse is there for the fact that according to Government figures, only one in 100 British households is properly insulated, when lack of insulation is the biggest contributor to fuel poverty in this country?

Edward Miliband: It is characteristic of the Liberal Democrats to blame the Government for the weather. On the hon. Gentleman's serious question about energy efficiency and insulation, there is more to do, but it is important to point out that under our programmes, 1.5 million homes a year are being insulated and getting the help they need. The Warm Front programme, which did not exist before, has helped 2 million homes since its inception. There is more to do. That is why we are planning a decade-long improvement in energy efficiency, including a pay-as-you-save mechanism, to make it possible to do more.

Simon Hughes: The Secretary of State has given us a piecemeal answer to a much bigger question. Before his Government are frozen out by the electorate, is he willing to commit himself today to a national 10-year warm home programme and to support the amendment to the Energy Bill that my hon. Friends and I have tabled, which would mean that the programme could start this year?

Edward Miliband: I will look at the amendment-but the last Bill that came forward from the Liberal Democrats was an uncosted shopping list, with no basis for paying for it. That is a luxury of opposition but not a luxury of government. We are planning, and I can commit to, a national energy programme over the next 10 years. We are consulting on it, and will have more to say about it in the coming weeks.

Derek Twigg: Ofgem, the regulator, has a very important role in reducing fuel poverty, but the Public Bill Committee on the Energy Bill has just heard evidence that it does not necessarily have the confidence to know legally when it can intervene to force companies to do more. Will my right hon. Friend comment on that, and say how the Energy Bill will help to make it clear to Ofgem what responsibilities it has to help people?

Edward Miliband: I look forward to reading the report of proceedings in the Energy Bill Committee-it sounds as if many interesting things were said. One purpose of the Bill is precisely to strengthen Ofgem's powers in a number of respects and to make it a more proactive regulator-a regulator that not only relies on competition to help consumers, but realises that it has a duty to be proactive on their behalf. It has done more of that in the past year, including taking action on prepayment meters and other issues, but I am sure there is more to do.

Greg Clark: Has the Secretary of State read the report on fuel poverty published in 2008 by the Select Committee on Business and Enterprise? It said that to keep fuel affordable, increasing gas storage
	"is now an issue of national importance and should be a high priority in domestic energy policy."
	What increase in storage capacity has there been since then?

Edward Miliband: More gas storage is coming on line, including the Aldbrough gas storage project, which recently completed its first phase. The hon. Gentleman is going around saying that gas storage is a big problem for the UK and citing figures, but National Grid is quoted in the papers this morning as saying that his figures are meaningless, because they ignore the role of the North sea, which provides 50 per cent. of our gas storage, and the role of UK import capacity.

Greg Clark: The Secretary of State should listen to the Select Committee and note that North sea production is in decline, and he should listen to Lord Hunt of Kings Heath, his junior Minister, who said that the new storage capacity opened in the past year has been the equivalent of five hours' worth-which is about as much time as it takes the Secretary of State to decide whether or not to back the Prime Minister. Gas storage helps to offset fuel poverty by allowing us to buy supplies when they are cheap in the summer, to be used in the winter. Is he aware that if we had had just half of France's storage capacity, British consumers could be paying £1 billion less for their gas this winter? What is his policy on how much gas storage is needed?

Edward Miliband: We need more gas storage, and there are more projects planned. The hon. Gentleman has cited figures for gas storage, but  The Independent this morning says that
	"the National Grid dismissed the calculation as a 'meaningless number' because it ignored both the amount of gas imported and that nearly half of UK demand is met by North Sea production."
	We do need more gas storage, but it is worth saying that at the beginning of this week gas storage was 80 per cent. full in the UK. The hon. Gentleman claims that gas storage is somehow an issue in this cold weather, but he knows that that is complete nonsense.

Greg Clark: Is it not clear that when fuel poverty is soaring, we have too little gas storage capacity, and the Government have said that they expect power cuts by 2017, they are-in this winter of discontent with, and within, the Government-taking us back, with every day that goes by, to a world that we thought we had left behind in the 1970s?

Edward Miliband: I do not know whether that was a question, a statement or something that the hon. Gentleman prepared in front of the mirror this morning. Frankly, he will have to do better. Playing politics with energy security and gas storage, and alarming people, is the wrong thing to do.

Fuel Poverty

Tony Baldry: How many households in the UK were in fuel poverty in (a) 2003 and (b) 2009.

John Penrose: How many households in the UK were in fuel poverty in (a) 2003 and (b) 2009.

David Kidney: The current exceptionally cold weather causes us all concern for the well-being of all households in fuel poverty. The Department for Work and Pensions makes cold weather payments as a contribution towards extra heating costs during a week of very cold weather in the area in which an eligible customer lives. This winter the number of cold weather payments made is estimated to be worth £185 million. Payments are made automatically, but if anyone has questions about the help available to them, they can access information on the directgov website-or if they do not have access to, or the inclination to use, the internet, they can always ask their Member of Parliament.
	The estimated number of households in fuel poverty in the UK was around 2 million in 2003. The latest year for which figures are available is 2007, and they show that there were then around 4 million fuel-poor households in the UK.

Tony Baldry: I thank the Minister for that statement. My understanding is that last winter more than 5 million families were in fuel poverty. The Government have a statutory target to eradicate fuel poverty in vulnerable households by 2010. Will they meet that target?

David Kidney: It is very frustrating to me that the figures for fuel poverty are two-years-old, so the figure that the hon. Gentleman gives is an estimate. There is no doubt that rising fuel prices between 2004 and 2008 have caused us great difficulty in meeting that target, but I have not given up trying to meet it. All our efforts are directed towards eradicating fuel poverty, as we are indeed required to do.

John Penrose: Will the Minister accept that during one of the worst cold snaps for years, when vulnerable people such as pensioners in my constituency and elsewhere are struggling to keep their homes warm, it is especially important that consumers can switch to the cheapest available energy tariff offered by their supplier? Does he therefore agree that energy companies should be obliged to publish information on each customer's bill showing whether they would be better off on an alternative scheme?

David Kidney: I completely agree with the hon. Gentleman, and it is the Government's policy to encourage people to study the market and switch if possible. There is a new licence condition applying to every supplier from this month, requiring them to deliver to their customers an annual statement that includes information about their ability to switch and advice on how to do so. By the end of this year, every customer should have received the first of those statements.

Mark Todd: May I draw the Minister's attention to the needs, in this weather, of those who live in mobile homes, many of whom are on low incomes? They have a very limited choice of energy supply, and also lack options for additional insulation to improve the efficiency of their homes. I have raised this issue before, and the Government have so far done very little to assist that group of consumers to reduce the proportion of their income spent on energy bills. Is there anything that he can do now?

David Kidney: My hon. Friend has indeed been persistent in pursuing this issue, and I am pleased to say that in response to his pressure, the Department has agreed that it wants to pilot some schemes for delivering greater energy efficiency measures to park homes. I am not in a position to announce at the Dispatch Box today what the schemes will be, but I will be able to do so shortly.

Severn Barrage

Alun Michael: What recent assessment he has made of progress on a decision on an option for the construction of a Severn barrage.

David Kidney: The Government are currently carrying out a feasibility study to decide whether we could support a Severn tidal scheme, and if so, on what terms. All the evidence gathered will be published alongside a second public consultation, which is expected to be held later this year.

Alun Michael: I am grateful to my hon. Friend for that reply. This is an enormously exciting, but also enormously challenging, project: it has the potential to make a major contribution to the UK's renewable energy needs, but is complex in both engineering and environmental terms. As well as providing the public information that he mentioned, will he agree to draw together Members of Parliament on both sides of the Severn estuary so that we can be involved in an interim process and understand how the Government are taking the project forward?

David Kidney: My right hon. Friend is right to say that there are great potential gains to be made from generating renewable energy from a barrier or similar scheme on the Severn. On the other hand, however, there are international and national nature conservation and biodiversity issues that also have to be considered. My noble Friend Lord Hunt, my fellow Energy Minister, recently wrote to all hon. Members updating them on the process and expressing a willingness to hold the sort of meeting that my right hon. Friend has just suggested. My noble Friend and I remain perfectly willing to meet Members of Parliament to update them on the scheme.

David Heathcoat-Amory: Could the study that the Minister mentioned cover the need for a grid connection for the Severn barrage project? At present, the National Grid wants to put in a new line of pylons across the Somerset levels, which will also affect the constituency of my hon. Friend the Member for Weston-super-Mare (John Penrose). That is controversial, and we oppose it. It would make sense to go for a submarine cable to take the energy away from Hinkley. That could be done as part of the study for the Severn barrage.

David Kidney: I have heard the right hon. Gentleman make that point on behalf of his constituents before, and I congratulate him on his persistence and ingenuity in working it into the question before us. I assure him that every aspect of the development is being considered in the feasibility study, so my answer to his question is yes.

Copenhagen Conference

Peter Soulsby: What steps his Department is taking to tackle climate change following the outcome of the United Nations climate change conference in Copenhagen; and if he will make a statement.

Edward Miliband: Despite the disappointment that Copenhagen did not succeed in the way we had hoped, we are determined to work with our international partners to build on the achievements of the Copenhagen accord, agreed to by representatives of 49 developing and developed countries. In particular, we will work with others to ensure that the deepest possible cuts in emissions are made, that we deliver on the financial promises made to the developing world, and that we redouble our efforts to secure a comprehensive, legally binding framework.

Peter Soulsby: I thank the Secretary of State for that reply, and congratulate him and the Prime Minister on the part that they played in getting as far in Copenhagen as was achieved. However, will he comment on the impression that the problems in Copenhagen were at least as much those of the decision-making process as they were matters of substance? Will he say what action the Government are taking to try to reform the decision-making process to ensure that the frustrations of Copenhagen are not repeated in the future?

Edward Miliband: My hon. Friend draws our attention to an important issue that I talked about a bit in my statement on Tuesday. The process was unsatisfactory. I have talked to the executive secretary of the UN framework convention about how we can reform that process, and I am pleased that the UN Secretary-General, Ban Ki-moon, has said that he too will think about how the process can be reformed. We must ensure that we do not have a repeat of the process problems at Copenhagen, which obscured any differences over substance and prevented proper discussion of them. I think that the process needs to be reformed, and I think that that will happen.

Gregory Barker: Despite the disappointment of Copenhagen, there are still many practical things that we could and should be doing at home-on rain forests, for example. We will never halt their destruction if we do not choke off demand for illegal timber. Unlike the Prime Minister's approach, an Act to halt the import of such timber by making it a criminal offence to sell it here in the UK would command widespread support on the Labour Benches, as well as on ours. So will the Secretary of State support an Act to make the sale of illegal timber a criminal offence? If he does not act, a new Conservative Government will.

Edward Miliband: We now see the Conservative party trying to play politics with international climate change-exactly what happened on Tuesday, in response to my statement-which is deeply regrettable. We are working in the European Union to deal with the problem of illegal logging, but we will also look at any other proposal that is put forward.

Colin Challen: I welcome my right hon. Friend's statement this morning that we should redouble our efforts following Copenhagen and not throw our hands up in despair, even though the result was depressing. Will the Government be pressing to go ahead with the EU's higher than intended carbon emissions savings budget, and will he ask the Committee on Climate Change to review as a matter of urgency the costs of doing so?

Edward Miliband: My hon. Friend draws attention to an important issue. Over the coming months we will need to work to use the EU's commitment to move from 20 to 30 per cent., to lever in higher ambition from others. The commitment that the EU has made is an important one. I will be working intensively in the coming weeks, before the 31 January deadline for commitments to be lodged in the Copenhagen accord, to see how far we can get in Europe on that commitment. We have existing advice from the Climate Change Committee on the costs and benefits of moving to a higher figure-and in fact, as a result of the recession, the costs of doing so have fallen.

Tidal Energy

John Pugh: What recent progress has been made on developing tidal energy schemes; and if he will make a statement.

David Kidney: A lot of progress has been made on developing tidal energy schemes. The Crown Estate leasing round for the Pentland firth is on course, and we expect the Crown Estate to announce the successful bidders by the end of March. There are three feasibility studies for tidal range projects currently under way, for the Severn, the Mersey and the Solway firth. Officials have now received the final report on the screening study for marine energy development in English and Welsh waters, which will inform Ministers' decisions on whether to proceed with a strategic environmental assessment for English and Welsh waters.

John Pugh: I thank the Minister for that answer. However, given that something as modest as Peel Holdings' proposal for a tidal lagoon in the Mersey would generate 650 GW of energy a year-much more than wind farms-is it not time the Government got solidly behind such schemes, given our dismal record on renewables? We have had plenty of studies. We now need some action.

David Kidney: I got sufficiently solidly behind that project by visiting it last year and giving it my personal support. Peel Holdings and the North West Development Agency are currently spending £3 million on the feasibility study to which the hon. Gentleman referred, which will conclude this year. I am enthusiastic about its prospects of leading to a suitable scheme that will be meaningful in producing renewable energy from the marine environment.

Andy Reed: As my hon. Friend rightly said, any scheme has to be a reasonable one that works. Does he therefore recognise the work of the Energy Technologies Institute, which he visited in my constituency some time ago, in ensuring that the technologies that we introduce are the most efficient and best for the country, and will make a genuine economic impact? What steps is he taking to ensure that some of the private sector partners required to make that £1 billion Energy Technologies Institute work are being involved, and can he assist in ensuring that that happens?

David Kidney: I am solidly behind the Energy Technologies Institute too, having visited it. I congratulate the institute on its decision to invest in research and development, and deployment for marine technologies. My hon. Friend is so right that we are talking about an innovative collaboration between the public and private sectors. A number of key manufacturers in this country are subscribers to the ETI, and I would encourage more to join.

Gregory Barker: Feasibility studies, consultations, reviews and glossy brochures cannot mask Labour's total failure over the past decade to develop the huge potential of offshore renewable energy-not just tidal energy, but wind and wave energy, and other forms of harnessing the immense power of the sea. Will the Government now recognise that ambitious Conservative proposals for marine energy parks, supported by a green investment bank and new energy infrastructure offshore, is the way to realise the potential of our seas, rather than the piecemeal, short-term and ineffective approach that has characterised this out-of-touch Labour Government?

David Kidney: I just cannot understand how the hon. Gentleman can be so out of touch. This country leads the world in connected electricity energy from offshore wind, and the recent announcement of the round 3 leases by the Crown Estate makes us by far the largest contributor in the world to that technology. On marine technology-which is what this question was supposed to be about-I do not think the work we have done on the banded renewables obligation, the marine renewables proving fund or the strategic environmental assessment can be dismissed as lightly as the hon. Gentleman suggests.

Wind Energy

Nigel Griffiths: What estimate he has made of the number of wind energy projects approved by local authorities in the last two years; and if he will make a statement.

David Kidney: Local authorities in England, Scotland and Wales have approved 76 onshore wind energy planning applications in the last two years. All planning applications for wind energy in Northern Ireland are determined by the Northern Ireland Planning Service. There is now over 3 GW of installed capacity of onshore wind operating in the UK.

Nigel Griffiths: Is the Minister concerned about the number of Conservative and Liberal councils that oppose onshore wind farms, and about the Conservative MPs who oppose offshore wind farming? Does he realise that their opposition is sabotaging the £1 billion investment in renewables by the Labour Government?

David Kidney: The leader of the Conservatives says that we can judge what a Conservative Government would do by looking at their record in local government. They have an abysmal record of holding up and rejecting applications for onshore wind farms.

Nigel Evans: Although wind power can make a contribution to Britain's energy needs, does the Minister also accept that local authorities have an important role to play in listening to the desires of their local residents?  [ Interruption. ] If wind farms are appropriately placed, yes, but if they are inappropriately placed, they do damage the future of the industry.

David Kidney: I agree with the hon. Gentleman that the planning laws are there to strike an important balance between nature conservation and biodiversity on the one hand, and, on the other, the vital need for more renewable energy.

Carbon Capture And Storage

Phil Wilson: What recent assessment he has made of the effectiveness of carbon capture and storage technology in reducing the level of carbon dioxide emissions; and if he will make a statement.

Edward Miliband: The International Energy Agency estimates that carbon capture and storage could contribute up to 20 per cent. of the cuts needed in greenhouse gases by 2050. Without CCS, the cost of emission reduction needed to meet climate change targets globally would increase by more than 70 per cent. The four demonstration projects we are planning and those around the world will provide more information on the effectiveness of the technology.

Phil Wilson: In evidence to the North-East Regional Committee's report on industry and innovation in the north-east of England, Andrew Sugden, a director of the North East chamber of commerce said:
	"The private sector can go so far in clean coal technology, but so much is experimental and this is being done on a scale that has never been tried before. There has to be a balance of risk."
	What more can the Government do in this regard, and what kind of job creation can this technology achieve in the north of England?

Edward Miliband: My hon. Friend is absolutely right to say that the private sector can play a role in this, but the risks relating to this new technology-and, indeed, the gains-do not justify one company making the kind of investment required. That is why we are introducing the carbon capture and storage levy, which will provide a stream of funding for CCS over the next two decades. It is the largest such investment in the world.

Brian Binley: We have heard evidence in the Energy and Climate Change Committee of the great enthusiasm of some generators for connecting carbon capture and storage with extra production from the North sea to the tune of about 15 per cent. That has not been mentioned much, and I want to ask the enthusiastic Secretary of State whether he will get enthusiastic about this particular point.  [ Interruption. ]

Edward Miliband: I am always enthusiastic, as one of my hon. Friends has just helpfully pointed out. We should look at all the technologies that exist. I pay tribute to the hon. Gentleman, because he, among others in the House, is a great advocate of carbon capture and storage and the role that it can play. Britain is uniquely placed in relation to CCS because of the North sea.

Gwyn Prosser: What steps his Department is taking to encourage the use of carbon capture and storage technology; and if he will make a statement.

Edward Miliband: We are planning four demonstration projects funded by the CCS levy. We have also successfully argued for money to be set aside for up to 10 demonstration projects across Europe, and we are working with countries across the world on moving forward CCS technology.

Gwyn Prosser: What assessment has my right hon. Friend made of the overall job creation potential of CCS over the next five to 10 years? What will he do to ensure that such jobs are created right across the regions, and not just in the areas local to the plants?

Edward Miliband: My hon. Friend is absolutely right-across all regions there are opportunities relating to low carbon and, in a number of regions, relating to carbon capture and storage. We shall shortly look at where the CCS clusters can be, and how we can take proper industrial advantage of CCS. Estimates suggest that tens of thousands of jobs could be created in this area.

Nuclear Waste

John Robertson: What progress his Department has made on the proposal of the Committee on Radioactive Waste Management for deep geological disposal of nuclear waste; and if he will make a statement.

David Kidney: The Government accepted in 2006 the recommendations of the Committee on Radioactive Waste Management on geological disposal, coupled with safe and secure interim storage. Following public consultation, the Government published the White Paper, "Managing Radioactive Waste Safely: A Framework for Implementing Geological Disposal" in June 2008. The first step is an expression of interest from a community that may be interested in hosting a geological disposal facility. To date, we have received three expressions of interest relating to the Copeland and Allerdale districts in Cumbria. Officials are in discussion with these authorities, but it remains open for other local authorities to express an interest.

John Robertson: I thank my hon. Friend for his extensive answer. The Secretary of State said in an evidence session in the late summer that by late autumn we would have a statement on how to deal with nuclear waste and how to store it geologically. May we have this statement as soon as possible and why has there been a delay?

David Kidney: My hon. Friend has great knowledge of, and speaks with great authority on, this subject, so I take to heart his request that we hurry up and make the statement he seeks. I cannot answer him today regarding the reason for the delay, but I can assure him that the work I described in my answer to him will go on, and that we are looking forward to the construction and operation of a facility that will be a multi-million pound project, providing skilled employment for hundreds of people over many decades.

Peter Lilley: Does the Minister accept that even those of us who are sceptical about the more exaggerated theories of global warming want to see rapid moves towards greater diversity of supply, less reliance on imported hydrocarbons and therefore the rapid development of nuclear energy? Is it not a disgrace that it has taken so long to get to any kind of resolution to this problem of the disposal of nuclear waste?

David Kidney: No, this is the first Government who have got a grip on the decision about the long-term future disposal of nuclear waste. It is good, however, that there is common ground between us on the security of energy supply and its coming from diverse sources; on that we can agree. There has certainly not been any delay in planning or policy for new nuclear, as we have seen three consortiums coming forward with plans for about 16 GW of new power from nuclear.

Copenhagen Conference

Jamie Reed: What steps his Department is taking to tackle climate change following the outcome of the United Nations climate change conference in Copenhagen; and if he will make a statement.

Joan Ruddock: The Copenhagen accord sets out a framework for international action to tackle climate change, in which the UK will play its full part. The UK has so far committed to cutting emissions by 34 per cent. by 2020; our low carbon transition plan sets out the pathway for achieving this.

Jamie Reed: I thank the Minister for her reply. Everybody will have noticed the splendid efforts of her Department at Copenhagen, but there was some disappointment at the United Nations framework. If these disappointments continue, will the Department consider pursuing separate bilateral negotiations with the biggest polluters, namely the US and China?

Joan Ruddock: I think we would not specifically do that; we would not seek to undermine the UN process. We have not lost our hopes that we can proceed from the Copenhagen agreement. This was a kind of success-not as much as we wanted, but the fact is that there is so much on the table and we need to get on with it. The most important thing the UK can do at this point is to push forward on what we have got. We must ensure, for example, that the fast-track financing for developing countries comes on stream and we are going to make our own contribution of up to £1.5 billion on that. We also need to establish the high-level panel to look at the $100 billion financing proposals for 2020 and beyond, and we need to support the Danes in getting a critical mass of countries to support the accord. Furthermore, we have just a short time to get the most ambitious commitments put into the document by the end of this month. We will do our utmost, as my right hon. Friend the Secretary of State has said, to ensure that that happens so that we do not lose the dynamic that exists, despite the disappointments of Copenhagen.

Andrew Pelling: On the subject of the Government's leadership, will the Minister ask her colleague the Secretary of State to work in close association with his close friend at the Foreign and Commonwealth Office to persuade our embassies to ask the United States Congress to support the initiative, and also to persuade the European Union not to be divided on the issue?

Joan Ruddock: Indeed. I pay tribute to the Foreign Office and all its staff for their enormous efforts in the run-up to Copenhagen, and we can be assured that they will continue those efforts. Our bilateral discussions are critical to progress, not least in the EU, where we continue to strive for the most ambitious possible target: a 30 per cent. reduction in emissions by 2020.

Rob Marris: I welcome the $100 billion fund and the United Kingdom Government's leadership in that context, particularly given that part of the fund relates to adaptation to climate change. Will those moneys be in addition to, or a substitution for, development moneys that already go to developing countries?

Joan Ruddock: We have made it absolutely clear that there should be no question of countries' saying, "Because we give overseas aid, we do not need to make additional moneys available." We have suggested that no more than 10 per cent. of existing and promised official development assistance should be provided for adaptation or other climate-related purposes. We consider that limit very important. There are legitimate overlaps between development and adaptation to climate change, but they are limited, and we must make them so.

Topical Questions

Peter Bone: If he will make a statement on his departmental responsibilities.

Edward Miliband: One of my Department's responsibilities is helping people to cut their bills and their use of carbon. That is why this week, following the allocation of £50 million in the pre-Budget report, the Government launched the boiler scrappage scheme, which will give 125,000 households a £400 reduction in the cost of replacing a G-rated boiler with a much more efficient A-rated one. Further details can be obtained from the Energy Saving Trust.

Peter Bone: Can the Secretary of State give us an insight into what happens to his Department, and what delays are incurred, in the event of one of these coups-a Prime Minister scrappage scheme, if you will? How much time is diverted from the running of his Department? Conservative Members find the position very difficult to understand, because we are all united behind our leader.

Edward Miliband: That is a ridiculous question. It is clear from the launch of initiatives such as the boiler scrappage scheme that the Government are getting on with the business of government and helping people in these difficult times.

Jim Cunningham: What assessment has my hon. Friend made of the electric car trials in Coventry and elsewhere in the west midlands, and how does he intend to support those schemes?

David Kidney: I am glad that my hon. Friend has asked that question. This is a very exciting trial involving 100 electric vehicles in Birmingham and Coventry. We are observing the results keenly as we clearly need to move away from fossil fuels, given the volume of road traffic in this country.

Norman Baker: In the context of tackling climate change, the Minister is doubtless aware of the key report produced in the 1990s by the Standing Advisory Committee on Trunk Road Assessment for the Department for Transport, which demonstrated that providing extra capacity generates journeys that would otherwise not be made. Why are the Government bumping up carbon emissions unnecessarily by promoting a third runway at Heathrow and widening motorways for hard-shoulder running?

Edward Miliband: On the question of the third runway, I hope that the hon. Gentleman has seen the report from the Committee on Climate Change, which shows that we have a clear target for carbon emissions from aviation and explains how it can be accommodated within constrained demand from aviation. Our policy is not one of unconstrained demand, but nor does it assume that we will somehow freeze the amount of flying that people do. That is not realistic, and it would not be good for our economy. It would not be good for our society either, because many more people are emigrating to this country and will want to travel for business and other purposes.

Alun Michael: I have pointed out on a number of occasions that, while wind farm applications are often passionately opposed when they are seen to be imposed on the local community by big business, applications owned and promoted by the local community are often supported with equal passion. Will my right hon. Friend commit himself to making community ownership the norm for wind energy in the United Kingdom?

Edward Miliband: My right hon. Friend, who has been a great fighter for the co-operative movement, is entirely right. Community ownership plays a very important role. The feed-in tariff will also help to encourage communities to come forward with their own proposals for renewable energy.

Richard Ottaway: Will the Government stand by their pledge last year and include micro-combined heat and power in the forthcoming statutory instrument on feed-in tariffs?

Edward Miliband: We are in the middle of a consultation on that and the hon. Gentleman will have to wait for the results. The micro-CHP industry-we were looking at a micro-CHP boiler recently during the launch of the boiler scrappage scheme-is important and needs to be supported.

Ronnie Campbell: Now that clean-coal technology looks to be a certainty, how many coal mines does my right hon. Friend envisage will be opened shortly?

Edward Miliband: It is hard to estimate how many will be reopened but it is important to say that that will provide important support for our indigenous coal industry, and that carbon capture and storage can make coal a fuel of the future and will provide the certainty that our indigenous industry needs.

Edward Timpson: Recently released figures show that just over one in eight households in Crewe and Nantwich are living in fuel poverty. In attempting to tackle that growing problem, energy suppliers have committed collective social assistance spending of about £150 million in 2010-11, but what commitment have they made beyond 2011?

David Kidney: I encourage the hon. Gentleman to help such households in his constituency by referring them to assistance such as Warm Front and other energy efficiency measures, and to the energy supplier obligation. I also encourage him to seek to ensure that they have the benefits to which they are entitled and that they receive social tariff support from their energy supplier, if possible. The answer to his question lies yet again in the deliberations of the Committee that is considering the Energy Bill, about which we have heard so much today. We do indeed intend to put the voluntary agreement for social price support on to a statutory basis, and we propose to double the amount of support under that scheme.

Tom Levitt: I am encouraged by what my right hon. Friend the Secretary of State has said about feed-in tariffs. Will he confirm that, if feed-in tariffs are not sufficiently high to encourage community-owned, small-scale green power schemes, they will not succeed in that respect? In the light of that, will he redouble his efforts to find a space in his diary to visit the Torrs hydropower scheme in New Mills, the country's first 70 kW community-owned hydropower scheme?

Edward Miliband: I am looking forward to visiting the scheme my hon. Friend mentions. Such schemes can benefit from the feed-in tariff and other measures that we are taking. It is important that in April, when the feed-in tariff comes in, many communities and indeed individuals take advantage of it.

Roger Williams: As has been mentioned, those households that do not have the benefit of mains gas are more liable to suffer fuel poverty because of the cost of alternative fuel. Historically, the liquefied petroleum gas market has been very uncompetitive, but the Office of Fair Trading has now introduced regulations to bring more competition into the market. Unfortunately many consumers do not realise the opportunities that they now have to reduce the cost of fuel. Will the Secretary of State consider a publicity programme so that those consumers can understand the opportunities they have and reduce their fuel costs?

Joan Ruddock: I am grateful to the hon. Gentleman for his suggestions. He is absolutely right. There is continuing concern about that matter and about people who are off the gas grid and do not have options. We are looking at ways of dealing with that, particularly through the Energy Bill and mandated tariffs, which could be of some help but not sufficient-I agree with him on that. He suggests publicising what is available to people, which is a good idea and we will certainly look at that.

Paddy Tipping: Will the Secretary of State reassure domestic gas consumers that, even in extreme cold weather, good management of the grid, the use of North sea reserves and the interconnector mean that there is no prospect of their supplies being cut off?

Edward Miliband: My hon. Friend raises an important issue. We have seen, on successive days this week, record demand on the grid. Obviously, I am in regular touch with the National Grid about that. It assures me that supply can meet the demand out there, despite the quite extreme weather conditions we are facing. I maintain vigilance on that and talk regularly to the National Grid.

John Baron: Given the confusion caused by energy companies having more than 4,000 different tariffs, many Opposition Members believe that in order to help people who are paying too much for their energy, and particularly those living in fuel poverty, energy companies should be obliged to publish on all domestic bills whether their customers are on their cheapest tariff. When I raised this issue with the Secretary of State last year-

Mr. Speaker: Order. For the avoidance of doubt, let me say that we do need brief questions. May we have a question now, please?

John Baron: When I put this idea to the Secretary of State last year, he initially welcomed it, then backed away from it, and then said it would be included in Ofgem's annual statement. What-

Mr. Speaker: Order. I am sorry to interrupt the hon. Gentleman, but I did give him a chance to ask his question.

Edward Miliband: The hon. Gentleman has been a doughty fighter on this issue. My understanding is that Ofgem is introducing, as my hon. Friend the Under-Secretary mentioned in an earlier answer, an annual statement that must be provided to customers, and which gives the information the hon. Gentleman wants. I am sure that if that is not the case, the hon. Gentleman will take the matter up with my hon. Friend or myself.

Gwyn Prosser: The village of St. Margaret's in my constituency is working hard to become a low-carbon community. Can the Secretary of State assure us that the funding for the challenge scheme will continue, and will he join me in paying a visit to St. Margaret's to see the excellent work the community is doing?

Edward Miliband: I pay tribute to the community my hon. Friend represents and to the people of St. Margaret's for what they are doing. The low-carbon communities challenge has been a great success in terms of the number of applications received, and we want to help as many communities as possible to be trailblazers for low carbon, showing how the transition to it can make a difference to people's lives through the introduction of smart meters, insulation, renewable energy and a whole range of other measures. All this is part of the positive vision that we must offer for tackling climate change.

Christopher Chope: The Under-Secretary made an important announcement earlier in respect of residents of park homes. When can he provide more detail on that, and will he consider using one of the parks in my constituency as one of the pilot projects, because we have more than 1,000 park homes in Christchurch?

David Kidney: I thank the hon. Gentleman for that question. This issue has been under consideration for some time, so we are close to being able to give the detail he wants. I note his interest in his constituency being one of the pilot areas, and I shall take that on board as a representation.

Rob Marris: What support and encouragement are the Government giving to sub-aquatic marine energy generation-I am thinking of the plant off Northern Ireland, and we also had a United Kingdom plant off the coast of Portugal? This is the way forward for the future. What support is being given to it?

David Kidney: Our country has the best testing facilities in the world: we have the New and Renewable Energy Centre-NaREC-as well as a facility in the Orkneys and the forthcoming wave hub in Cornwall. The specific technology to which my hon. Friend refers is either in place at, or being built at, the Orkneys facility, with some further testing and accreditation, and it is hoped that it will be the first applicant for assistance from the marine renewables deployment fund.

Martin Horwood: Amid the general failure at Copenhagen, there was at least positive discussion about mechanisms to reduce deforestation. Is the Secretary of State content that, among the mechanisms envisaged, there is sufficient protection for the rights of forest peoples, who are probably the best guardians of the rain forest? Could not the British Government set a very important precedent and make a valuable contribution to this process by ratifying International Labour Organisation convention 169 on the rights of tribal peoples, as other European countries have done?

Edward Miliband: Okay, I shall endeavour to look up ILO convention 169. The hon. Gentleman's general point about the importance of protecting the rights of forest people as we tackle deforestation is very important. One of the areas in which more progress was made at Copenhagen was the so-called RED-reducing emissions from deforestation-negotiations. Some important commitments were made by developed countries, and we need to move that forward.

Nicholas Winterton: This House needs to be concerned about fuel poverty. Can the Secretary of State say how much the average electricity user is paying because of the subsidy relating to this Government's climate change policies being included in their bills?

Edward Miliband: From memory, I think we have said that by 2020 the climate change policies will add about 8 per cent. as a whole to energy bills. I say to the hon. Gentleman, however, that there is no high-carbon, low-cost future out there, because the truth is that if we want to have secure energy, we also need low-carbon energy-renewable and nuclear energy. So, yes, there are upward pressures on energy bills, and that makes life difficult for people, including those in fuel poverty, but it is right that we go down the low-carbon energy route. However, it is also right that we take measures to protect the most vulnerable.

Patrick Cormack: Has the Secretary of State read "Sustainable Energy-without the hot air", the widely acclaimed and freely available book by Professor David MacKay? Is he aware of the following statement within that book:
	"if we covered the windiest 10 per cent. of the country with windmills...we would be able to generate...half of the power used by driving an average fossil-fuel car 50 kilometres per day."?
	Does that not behove us to consider very carefully the viability of onshore wind power?

Edward Miliband: Our chief scientist is a very distinguished person and his book has been by my bedside for some time. I have certainly read parts of it, although I cannot promise that I have read it from cover to cover. It is a good and illuminating read.
	On the hon. Gentleman's question about wind power, I am clear that offshore and onshore wind power are part of our energy mix, alongside nuclear power and carbon capture and storage clean coal. All those things are necessary to provide us with secure and low-carbon energy.

Ann Winterton: Will the Government press the United Nations to undertake an assessment of the extra carbon emissions caused by the failed Copenhagen summit, not least in terms of the number of flights from places throughout the world and all those gas-guzzling limousines that had their engines idling while they waited to pick up distinguished delegates?

Edward Miliband: I do not think that that would be a good use of United Nations or, indeed, taxpayers' money, and I dread to think what doing the UN conference by video conference would have produced. The serious answer to the hon. Lady's question is that progress was made during the past year, partly as a result of the Copenhagen deadline, and we need to build on that in the years ahead.

Philip Hollobone: Kettering has a very successful wind farm, which has planning permission to expand by two thirds, but there are proposals for six further wind farms in my constituency. What mechanism can the Secretary of State give far-sighted local authorities so that they can zone areas for wind farm development while protecting other parts of the countryside?

Edward Miliband: The hon. Gentleman raises an important issue. One of the things we are doing is a mapping exercise across the country to see which are the most appropriate areas for wind farms; that will help local authorities. I applaud local authorities that embrace renewable energy-those that say no to it everywhere are doing the wrong thing-but of course, local authorities need to be able to take decisions about the most appropriate places for wind energy facilities, and indeed they do.

Salt Reserves

Caroline Spelman: (Urgent Question): To ask the Secretary of State for Transport if he will make a statement on the country's salt reserves and any implications this may have on local government's ability to maintain the road network.

Sadiq Khan: During this period of exceptionally prolonged severe weather, staff across the transport industries and national and local highways authorities are working extremely hard to minimise the disruption caused. The Highways Agency has its fleet of 500 salt spreaders and snow ploughs out in force and has been successful in keeping the vast majority of the major road network running, helping to prevent the formation of ice and build-up of snow.
	Following the severe weather in February 2009, the UKRLG-the UK Roads Liaison Group-recommended good practice of having at least six days of heavy salting capacity in the winter period, alongside a package of wider recommendations to improve resilience. The UKRLG noted that the Highways Agency was already holding a minimum of six days' continuous heavy salting capacity in winter periods. The Highways Agency entered this winter period with 13 days' capacity, and we regard this as the right response following last year's events.
	For the local road network, it is the responsibility of local authorities to decide how to respond to the UKRLG recommendations. We have kept in close contact with local authorities across the country to check how they are dealing with their own local road networks. Local authorities have told us that they increased their salt stocks at the start of the winter season compared with last year. The Local Government Association estimates that the equivalent of about 600,000 miles of road have been gritted by council gritting teams in the past 14 days, using about 38,500 tonnes of salt.
	The Department for Transport and devolved Administrations have been regularly monitoring salt supplies and stock levels across the country with the help of their agencies, local authorities and the companies that supply salt. Alongside this, mutual aid arrangements between local authorities and the Highways Agency can help to relieve areas that are experiencing particularly tight stocks of salt. The Government and the devolved Administrations have also decided that owing to the exceptional weather affecting the country, they should work in partnership to advise salt suppliers on priorities for deliveries. The LGA will assist with that process. A group started the national prioritisation work this week. That will help to ensure that stocks of salt are supplied to where they are most needed.
	We will continue to do everything possible to keep disruption to a minimum during this period of exceptionally prolonged severe weather.

Caroline Spelman: Thank you for granting this urgent question, Mr. Speaker. It is so topical that I think people would quite rightly have expected the Government to have made a statement on the subject by now, but we are grateful for this opportunity.
	Councils reviewed their own contingency plans in the light of their very bad experience of the snow as recently as February last year, and sent the report I have here, "Weathering the Storm", to the Minister's Department in August. Why, then, did it take until 15 December for Ministers to respond to that vital report? Does the Minister accept that with only 48 hours to go before the first predicted heavy snowfall in the south-east, councils' ability to implement the recommendations in full was compromised?
	Does the Minister consider that the advice that he received to increase the stockholding capacity of six days' worth of salt supplies is adequate, given the prospect of at least another week of sub-zero temperatures, or will he revise the guidance to take account of the figure that he gave in his first response, which was more like 13 days' worth? If so, how soon will he change that guidance and when can councils expect to receive it? Does he accept that if the report's recommendations had been accepted earlier than 15 December, it might have been possible to avoid the gridlock of lorries around the salt mine in Cheshire that are trying to collect salt on behalf of councils? As the Minister will know, in February of last year one of the learning experiences came from the difficulty to do with the flexibility of drivers' hours. At what point did the Government act on the recommendation to provide for flexibility in drivers' hours?
	Finally, do the Government intend to revise any of the guidance they have given to councils? If so, when can councils expect to receive this and will a copy of the revised guidance be placed in the Library of the House of Commons so that Members from all parties, whose constituents are experiencing considerable difficulty, might be able to see those changes?
	I am sure that all Members would like to pay tribute to the work being done by their councils to try to keep essential roads open. They are working around the clock to keep Britain moving.

Sadiq Khan: I pay tribute to all those who are ensuring that this country does not grind to a halt, whether they work for councils, for airports, for the rail sector or for the emergency services. They are doing a tremendous job to keep our country moving.
	The hon. Lady has asked a number of questions, which I shall try to answer in turn. If there is anything that I do not deal with, I am sure it will be taken up by other colleagues. I can also write to her or speak to her afterwards if I do not take up all her points in my short response.
	The hon. Lady is right to refer to the report made by the UKRLG in July. It was open to local authorities to follow the report's recommendations in July, rather than to wait for us to endorse it in December. She will be aware that many local authorities lived through the bad weather last February and March. I was surprised that she suggested that central Government should prescribe to local government and tell it what to do. Some might say that one of the reasons she is pointing the finger at central Government is that many of these local authorities are Conservative-run. Many constituents will want to ask questions about how their councils have performed in this difficult time.
	The six days' worth of supply is a recommendation of good practice. Some might decide to hold salt to cover much longer periods. We have examples of some local authorities that have salt for up to 69 days, so they have clearly not merely followed the good practice but decided that they should stock more. Indeed, we have stocked 13 days' worth with the Highways Agency. I am not sure whether the hon. Lady is suggesting that I, as someone with no expertise, should give advice on this issue, or that we should rely on experts to give advice. The UKRLG is made up of experts and they advised that the best practice was to stockpile six days' worth of salt.
	The hon. Lady also talked about what local authorities and the Government should have been doing. We are responsible for ensuring that the Highways Agency has motorways and trunk roads cleared and running smoothly-and, in broad terms, it has been doing that. It is for local authorities to ensure that local roads run smoothly. I have spoken to the LGA this week, and the Prime Minister spoke to it this morning. We are doing all we can to keep the country moving.

Norman Baker: I thank the Minister for his detailed answer, and I pay tribute to the hard work that has been undertaken by many employees of local councils and other bodies to try to keep our transport networks running effectively.
	Does the Minister think it sensible for us to rely on just one mine in Cheshire for 90 per cent. of our salt supplies, and will he consider whether we need to diversify further to ensure that we have guaranteed supplies for future events? Was it not unwise, last February, to recommend that councils hold only six days' supply, given the current indication that there will be 10 days of extreme weather conditions, and will he consider revising that advice?
	Is not one consequence of the current shortage of grit in many parts of the country that many side roads are not being treated in many areas? That leaves many elderly and vulnerable people effectively trapped in their homes, and is of great concern to them. Is not another consequence that pavements are not gritted at all in some areas? As far as I can tell, not a single pavement has been gritted by my Conservative council in East Sussex-not even those around doctors' surgeries, bus stops, supermarkets or anything else. A consequence of that, now and in December, has been that people have had to negotiate sheets of ice to purchase basic commodities and to do their normal work.
	Finally, will the Minister make an assessment of the cost to business and the health service of the failure of some councils to keep essential transport systems working? I am conscious that in my local primary care trust area, and in the acute trust in Brighton, which has done very well, about 1,500 people have been through the system with injuries such as broken wrists that might not have occurred had pavements been properly gritted. As a public policy point, we ought to assess the cost to the health service of the failure of some councils to use grit properly.

Sadiq Khan: I thank the hon. Gentleman for his sensible points and the questions that he has raised. Let me deal with each of them, starting with salt supplies. As he is aware, there are two main salt suppliers in this country, and the supply is governed by where salt can be mined or excavated. I am not sure whether he is suggesting that I should nationalise the industry or start procuring or producing salt. I can tell him that the Prime Minister has spoken to the chief executives of both those companies this morning to impress on them the importance of trying to excavate as much salt as possible and to get it out from the factories. The Highways Agency has procured salt from Spain and from companies in the USA, and some local authorities have been innovative in procuring it. There is a problem with salt storage. Some local authorities have problems with salt barns and with the amount of salt they can store for a long period of time, and so are governed by lack of storage space rather than not being sufficiently geared up to get as much salt as they can.
	On the hon. Gentleman's points about what has happened in his local communities, I must tell him that it is for local authorities and locally elected councils, which know their communities best, to decide where salt and grit should be laid down. The hon. Member for Meriden (Mrs. Spelman) suggested that perhaps we in Whitehall should have a map and decide which roads should be gritted. If there are problems in some areas, it is important that councillors make sure that the right parts of their communities are gritted. Clearly, there is a problem with the amount of grit available in relation to the extreme weather that we are having, and so priority assessments will need to be made. Those areas of the community that are a priority will need to be gritted.
	The hon. Gentleman's final point is important. The cost to us of bad weather, not only in financial terms, to business, but in human terms, with operations being cancelled and school hours being lost by children, is immense. However, the weather is, on all objective assessments, the worst that we have had for almost 30 years, and so a sense of perspective is required.

Tom Watson: Is it not the case that a small number of politicians are sitting in their warm offices e-mailing press releases to create despondency, when many tens of thousands of public sector workers are out there keeping the country moving? Should we not be praising those workers, rather than moaning?

Sadiq Khan: I thank my hon. Friend who, as ever, makes a really important point. The number of public servants out there shovelling away at grit to make sure that our pavements are clear and our roads gritted is immense. He will be pleased to know that the Prime Minister got in touch with the Highways Agency this morning to put on record his personal thanks for the hard work done by its staff in making sure that our country does not grind to a halt.

Stephen O'Brien: The UK's largest rock salt mine is at Winsford in my constituency. The Minister has notably failed to praise the work force there-

Barry Sheerman: He did.

Stephen O'Brien: He did not. The work force at the Winsford rock salt mine are working 24/7 to produce 30,000 tonnes per week, but it is also most important to bear in mind the forbearance of the people of Winsford. The restrictions on HGV movements have quite rightly been relaxed, but people there are finding that their town is hemmed in by queues of lorries waiting to be resupplied. Does the Minister agree that it is important to recognise the need to get stockpiles right in the autumn, in advance of winter? At the moment, we rely on the salt unit to produce the salt in an emergency.

Sadiq Khan: I thank the hon. Gentleman for his comments, and there is not much in what he said that I disagree with. Not only do I pay tribute to the hard work done by the people at the Winsford rock salt mine, but the Prime Minister personally rang the chief executive to ask him to pass on his thanks for the great work they are doing. I should also like to thank the hon. Gentleman's constituents, who are having to put up with lorries going through their communities literally 24 hours a day. He will be aware that there are conditions attached to lorries going through the town during working hours, but local residents have indulged the trucks. There are very good reasons for people to work around the clock, and many will have seen the photographs and images of the queue of lorries leaving the factory. Although it looks chaotic, staff are doing a very important job in ensuring that the right parts of the country are receiving much-needed grit.

Joan Walley: While I urge my right hon. Friend to look at the whole issue of distribution and access to salt supplies, may I add that there is a real issue with the nitty-gritty-if I dare say that-of all this? Local people cannot understand why their pavements are not being gritted. I urge him to see whether there is some way to make information available so that local people know what standard of service they can expect from their local council.

Sadiq Khan: One of the things that I was keen to do when speaking to the LGA, the Prime Minister and some of my officials this morning was to make sure that local authorities use best practice and provide a sufficient standard of care for local residents. There are health and safety issues here, as we clearly do not want more people falling over and getting hurt than would be the case without this adverse weather.
	I am reluctant to prescribe what local authorities should do, as clearly this is a matter of horses for courses. We need to make sure that the parts of communities most in need of having their pavements or roads cleared are having that done. I am happy to carry on working with the LGA and others to see whether lessons can be learned.

Ann Winterton: Will the Minister acknowledge the huge efforts being made at British Salt at Middlewich in my constituency, which produces salt from brine? Will he ensure that the LGA has better plans in future for getting roads in partially rural constituencies cleared more effectively than has been the case this time?

Sadiq Khan: I appreciate that roads are essential lifelines in rural parts of the country, and I can understand why local authorities would want to ensure that they are cleared more swiftly in future. The hon. Lady is right to remind me that there is a company in Middlewich in her constituency that is doing a huge amount of work to provide salt and grit and to make sure that supplies reach the rest of the country. She also spoke about the need for the LGA to have better plans in future, but we have to be careful what we wish for. On the one hand, local communities elect councillors and local authorities do a very important job but, on the other, pressure is brought to bear on me, as a Minister in Whitehall, to tell local authorities what to do. I suspect that some of that could be because some of the local authorities doing a bad job are Tory councils.

Barry Sheerman: Does my right hon. Friend agree that many people whinge at this time of year? As he said, this is the worst weather for 30 years, but the fact is that many local authorities are doing a very good job. The authority in Huddersfield and Kirklees is doing a very good job, even though we have had real problems with obtaining more supplies of salt and grit. Is it not the truth that the men and women who have been keeping our roads clear have the essential qualities of grit, determination and courage-something that some politicians could learn from?

Sadiq Khan: I agree wholeheartedly with my hon. Friend's comments and echo his tribute to the public servants, men and women, who have done a huge amount to ensure that our roads and pavements are cleared. Public servants and council workers in Huddersfield, Kirklees and elsewhere are doing a huge amount, and that is one reason why I am reluctant to stand here and criticise local authorities-when I know that so many are doing such a good job.

Maria Miller: I commend the efforts of public sector workers in Hampshire and Basingstoke who, as the Minister knows, are doing the best they can to keep our roads open. He said that salt deliveries are already being prioritised so that they are sent where they are needed most. What criteria are used when those decisions are made? The lack of transparency in that process was a key criticism in the UKRLG recommendation, which the Minister said he accepted in full.

Sadiq Khan: The hon. Lady has written to me because of the concerns in her constituency, and I am responding to the points she made in her letter, which highlighted a number of her worries. Several criteria are looked at: the amount of available stocks; whether there are mutual aid facilities, with different local authorities able to provide assistance; how recently deliveries were made to local authorities; and weather conditions. Importantly, we do not decide where the priorities lie; the LGA does, working with the Highways Agency, the devolved Administrations and the suppliers. What is important is that the regional resilience centres receive as much updated information as possible from local authorities, which can then determine which parts of the country receive the salt quickest.

Roberta Blackman-Woods: My local authority, Durham county council, has been working around the clock to try to keep our major routes open, including all bus routes; and it has been doing so continuously since 16 December, putting down as much as 1,400 tonnes of grit each day. As a result, we have now had to put pressure on the mine in question, and I had to contact it myself to ensure that it delivers the necessary stocks to Durham. What pressure is being applied to mine owners? They are doing a really good job, but during this difficult period it would help if they opened at those weekends when it is necessary to make deliveries.

Sadiq Khan: That point refers to a previous question about the stocks leaving mines, and I am pleased to tell my hon. Friend that the mining companies will be working not only around the clock, but seven days a week, which is very important. She rightly refers to the fact that some councils-most of them, indeed-have been working around the clock since 16 December, and further bad weather is predicted over the next period, so we should bear that in mind. Alongside the pressure that I have brought on mining companies and my hon. Friend has brought on her local authority, the Prime Minister this morning also spoke to the two biggest salt procurers to ensure that we impress on them the need to try to excavate as much as is humanly possible.

Jo Swinson: In East Dunbartonshire a severe shortage of salt has left many roads and pavements in a treacherous condition, and earlier this week parts of Scotland ran out of salt completely. What specific requests have the Scottish Government made for assistance in securing additional salt; and what has been the result of those requests?

Sadiq Khan: One reason why we are working with the devolved Administrations in Scotland and Wales is that the same salt producers supply both countries. We would not want Scotland and Wales to lose out as an unintended consequence of our prioritising English local authorities. That is why both countries are very much inside the loop when it comes to the Salt Cell organisation to which we have referred. We are in regular contact with our colleagues, and that includes discussions about salt importation from overseas. We will continue to keep in touch with them over the next period.

Tom Levitt: In some parts of the country, supplies such as milk and fresh food are inevitably being compromised. Will the Minister pay tribute to those voluntary sector and community groups that organise people to be on the look out for the needs of vulnerable members of the community; and will he say a word about everybody being a good neighbour at this time and looking after vulnerable neighbours in their streets?

Sadiq Khan: My hon. Friend makes a very important point. I pay tribute not only to those people who, out of the goodness of their heart and common decency, check on their neighbours, whether they are elderly or not, and ensure that there is sufficient food for them, but to those who get the shovel from their shed, clear their front pathway and help the old person next door who may need assistance. Whether it is young children, helping old people to cross the roads and clearing their front paths, or us older citizens, I pay tribute to the resilience of the British public over the past three weeks, who have shown what is good about our society.

David Lidington: I thank the public sector workers who have been putting in very long hours in the Aylesbury and, indeed, Buckingham constituencies to deal with the problems caused by snow and ice locally. However, many able-bodied local residents would be willing to clear the snow and ice on the pavement in front of their properties if they were not scared of being sued by somebody who subsequently fell over. Will the Minister look at the guidance and the law on that point to try to ensure that common sense and public spiritedness are given a fair wind?

Sadiq Khan: I am sure that that did not escape your notice, Mr. Speaker-that sucking up to you! I too pay tribute to the public servants of Buckingham, who are doing a great job. However, the hon. Gentleman makes a serious point, and I would be thoroughly disappointed if people were reluctant to be a good neighbour and clear their pathways for fear of being prosecuted. I have seen evidence of good neighbours in my community, in Tooting and Wandsworth, and I have heard about it from stories around the country. I hope that that continues over the next period.

Tim Loughton: Notwithstanding the short-term impact of what needs to be done, I must say that there is a longer-term impact on the fabric of the roads. They were already breaking up after the most recent bout of poor weather, and they were not helped by gritting, either. Counties such as mine, West Sussex, have faced real-terms cuts in their highways grants over recent years, so will the Minister look at the situation and at how we can help authorities to repair roads in the longer term? If we do not, the problem will get worse and worse.

Sadiq Khan: The hon. Gentleman will recognise that we have increased local authority capital investment for those matters two or three times in recent years. In fact we were criticised for doing so. The important thing is that local authorities take stock of the areas where adverse weather causes problems. He is right to say that gritting and adverse weather causes more potholes in, and problems with the fabric of, our roads, but it is for local authorities to know their communities best and to decide where their priorities lie when it comes to spending their moneys.

Angela Watkinson: Many grit bins that local authorities provide for residents' use on footpaths have been vandalised, leading to avoidable falls and injuries. Will the Minister join me in condemning the people who are responsible for that mindless vandalism; and will he discuss with his colleagues whether it is possible to source vandal-proof grit bins?

Sadiq Khan: I unequivocally condemn those who vandalise such salt bins. I have also heard stories about them being stolen, and that beggars belief. On the one hand we are talking about the very best of British; on the other, we see examples such as that to which the hon. Lady refers. I am happy to look into any technical areas on which we can work to make salt bins vandal-proof.

Andrew George: I do not wish to diminish the seriousness or scale of the task that staff have had to undertake, and salt reserves certainly need replenishing in Cornwall, but I am not sure that the Minister has answered the questions about pavements from my hon. Friend the Member for Lewes (Norman Baker) and the hon. Member for Stoke-on-Trent, North (Joan Walley). Many people are walking on the roads and putting themselves in greater jeopardy. Have the Minister and his Department considered whether any guidance is required to ensure that accidents, which we know are happening throughout the country, are avoided?

Sadiq Khan: Perhaps I can answer the hon. Gentleman's question this way: we know that public safety demands that local authorities clear and grit certain roads; and we know that the Highways Agency is ensuring that motorways and trunk roads are gritted. However, local authorities are responsible for pavements, and it is for them to decide the priority areas in their communities. Some authorities may decide that pavements leading to and from a school or a GP's surgery are a priority, but I am not sure that I should advise local authorities on which parts of their communities need to be gritted. I am certainly not keen on any politician in Whitehall telling me or the leader of Wandsworth borough council which parts of Wandsworth need to be gritted. Local council leaders and officers in town halls know which parts of their community deserve to be gritted. However, when there is a shortage of grit, priorities need to be established and decisions made about which areas are gritted, and some inevitably will not be.

William Cash: Does the Minister accept that in the guidance given by central Government, the criteria mentioned by my hon. Friend the Member for Basingstoke (Mrs. Miller) must be complied with? It is no good suggesting that local authorities alone can make these decisions if national suppliers are involved, as the chairman of the Highways Agency in Staffordshire, Mike Maryon, has made clear. We had temperatures of minus 17° in Staffordshire, Moorlands. Rural areas have been severely affected. There is no point in the Minister trying to pass the buck to local authorities if the overall number of days' supply has been got completely wrong.

Sadiq Khan: I am not sure what the hon. Gentleman is suggesting we do. The salt suppliers are private companies who produce and sell salt, and local authorities decide what they need for their communities. The good practice advice given to local authorities is that there should be supplies of at least six days' worth, and they can follow that advice or not do so. Some local authorities stockpiled many weeks' worth of grit because they took the sensible course of action. The Highways Agency decided that there should be 13 days' worth of grit in our stocks. If he wants us to consider the possibility of those private companies being taken over by a public company, and therefore local authorities being told how much supply they should keep, I would not recommend that. We should work with the Local Government Association, the Highways Agency, the devolved Administrations and the salt suppliers to ensure that those parts of the country that need salt the most get it the quickest.

Nigel Evans: Many of my rural villages have been badly affected by this exceptional dumping of snow. I assume, because we spend millions on the Met Office, that the Government were given several days' advance notice of the exceptional weather conditions. Was not that the time to ensure that the grit got out to rural areas, in particular? The Minister says that there is a storage problem. Many farmers with spare capacity would be delighted to hold that exceptional storage on their farms, which would ensure that these villages could be passable.

Sadiq Khan: The hon. Gentleman's final point is a very good one. Some local authorities in rural parts of the country use farm buildings such as barns to store salt. If there are to be further prolonged periods of bad weather over the coming years, the storage of salt will be a big issue and we will need to consider whether we can set up central depots or points where it is stored and can be reached. In October, we surveyed local authorities to find out how much salt each of them had. Those that responded told us that they had at least six days' worth of salt supply. Some of the anecdotal evidence from the experience of colleagues around the country leads me to believe that that was not necessarily the case. We are looking into how much salt some local authorities had and whether they were inaccurate when they told us in October that they had six days' worth, because some clearly did not. The hon. Gentleman raised another good point in relation to advice from the Met Office.

Philip Hollobone: I am afraid that the Minister did not answer the question from my hon. Friend the Member for Aylesbury (Mr. Lidington), who raised a serious issue. Residents are frightened of being sued if they clear public pavements in front of their property, and shopkeepers are frightened of breaking their liability insurance if they do likewise. Will the Minister consider changing the law to protect residents and shopkeepers who clear pavements in front of their properties?

Sadiq Khan: There is no criminal liability, as I understand it. I suspect that the hon. Gentleman is referring to the possibility that somebody could sue for damages because of negligence. I am not sure if he is suggesting that I provide immunity from a civil action under the law of tort. As much as I like to empire-build, I am afraid that I do not have that power or gift at my disposal.

David Heath: To bring the Minister back to the sensible things that he said about looking after elderly people, will he use his Department's influence with social housing providers to impress on them their duty of care to elderly and infirm residents of sheltered accommodation to ensure that the common areas of such properties are kept safe? At the moment, they do not believe that they have that responsibility, but I think they do.

Sadiq Khan: The hon. Gentleman raises a very important point. I know from my own experience that we can go and help our mum to clear her front pavement, but someone in sheltered accommodation or an older person living by themselves clearly needs some help. I will look into the situation and respond to him directly about what we can do.

Nicholas Winterton: There are clearly resource implications resulting from the extreme weather that we are experiencing at the moment. This has nothing to do with party politics; I am sure that whichever party controls a local authority, it will do its best to help local people and businesses. Is there any exceptional emergency fund to assist local authorities that will exceed any budget allocation that they made in respect of salt and grit? This is clearly important, as we need to keep the country running. My constituency has large rural areas, including the Peak District national park. Can any exceptional help be given to local authorities such as mine-Macclesfield and Cheshire East-so that we can keep the area running?

Sadiq Khan: The hon. Gentleman makes a good point. Bellwin funding is available, and local authorities know that the Department for Communities and Local Government can assist them in relation to that. There was a recent example of emergency funding being made available in Cumbria following the flooding. I suggest that his council leader speaks to the DCLG or the Department for Transport to see whether sufficient thresholds have been reached in his constituency to judge whether the Bellwin criteria apply.

Andrew Pelling: On the first Monday of the cold snap, 25 people reported to Mayday's accident and emergency department with fractures, compared with six at the same time in the previous year, when the weather was somewhat balmier. Will the Minister look positively at what is done by Durham primary care trust, which provides money to the local authority as a preventive measure to ensure that there is more gritting and therefore fewer people turning up at hospital injured?

Sadiq Khan: I am happy to listen to good ideas. I would be keen to consider whether the Department of Health and the DFT can work better together and whether lessons can be learned from Durham that can be used in London and other parts of the country. I am happy to go away and look at the hon. Gentleman's suggestion.

Philip Dunne: The Minister has referred to Salt Cell-the cross-departmental group of officials responsible for managing the supply chain with the salt suppliers. Is he aware that many councils across the country are concerned that this group is not coping with the situation in which we find ourselves and is not communicating properly with suppliers?

Sadiq Khan: I take on board the hon. Gentleman's comments. I can undertake to speak again to the LGA to see whether it has heard any grumblings from local authorities and try to rectify the situation. We do not want local authorities to feel that they have been harshly treated because of the way that Salt Cell operates. That group is there to help to prioritise supplies. I will reflect on his comments, and if there any issues for consideration, I will be happy to speak to him directly or report back to the House at a later date.

Business of the House

George Young: May I ask the right hon. and learned Lady to give us the business for next week?

Harriet Harman: The business for the week commencing 11 January will be:
	Monday 11 January-Second Reading of the Children, Schools and Families Bill.
	Tuesday 12 January-Consideration in Committee and remaining stages of the Personal Care at Home Bill.
	Wednesday 13 January-Opposition day [2nd allotted day]. There will be a debate on education, skills and training opportunities for young people in the recession followed by a debate on energy security. Both debates will arise on an Opposition motion.
	Thursday 14 January-Topical debate, subject to be announced. To follow, the Chairman of Ways and Means has named opposed Private Business for consideration.
	The provisional business for the week commencing 18 January will include:
	Monday 18 January-Second Reading of the Crime and Security Bill.
	Tuesday 19 January-Consideration in Committee of the Constitutional Reform and Governance Bill (day 3).
	Wednesday 20 January-Consideration in Committee and remaining stages of the Fiscal Responsibility Bill.
	Thursday 21 January-If necessary, consideration of Lords Amendments to the Video Recordings Bill. To follow, the Chairman of Ways and Means will name opposed Private Business for consideration.
	I should also like to inform the House that the business in Westminster Hall for 14 and 21 January will be:
	Thursday 14 January-A debate on supporting young people in the recession.
	Thursday 21 January-A debate on violence against women.
	You, Mr. Speaker, have paid tribute, on behalf of the House, to David Taylor, as did the Prime Minister and the leaders of the Opposition parties yesterday. I should like to add my tribute as Leader of the House. There is an empty space up on that Back Bench today. [Hon. Members: "Hear, hear."] We will miss his contributions, not least at this time every Thursday. The good that he did as an MP will endure in the improved lives of the many, many constituents he personally helped. More widely, the good that he did in this House will endure-for example, his private Member's Bill, the Management of Dementia in Care Homes Bill, laid the basis for, and lives on in, our national dementia strategy. He is a big loss to his family and also to the House.

George Young: May I thank the right hon. and learned Lady for next week's business, and also for what she said about David Taylor, which I strongly endorse? In an age in which the standing of the Chamber has diminished, and in which the Chamber lies empty for much of the day, he was often assiduous in his attendance and he was an independent contributor to our debates, including, of course, in his regular appearance at business questions. He was a good parliamentarian and will be much missed.
	May I thank the staff of the House for ensuring that this place has continued to run smoothly despite the bad weather that is continuing to disrupt the whole country?
	Now, when will the right hon. and learned Lady give us the dates of the Easter recess? Those who work in the Palace of Westminster can take a holiday only when we are not sitting, and they need to make their plans for the months ahead. I have been asking for the dates almost every week since October. When will she announce them?
	Can the Leader of the House untangle the Government's muddle about the Budget? In a television interview on Sunday morning, the Prime Minister said:
	"I believe there'll be a Budget this spring".
	Given yesterday's devastating report from the Treasury Committee, which eviscerates the Government's current plans to reduce the deficit, will she confirm that there will be a Labour Budget in March, and that it will spell out the details of how the Government intend to deal with the financial crisis? Hopefully that will generate more interest among Government Back Benchers than the Second Reading of the Fiscal Responsibility Bill on Tuesday, during which not one Labour MP spoke in support.
	When will the House debate the report from the Commons reform Committee? As we saw yesterday during the debate on private Members' Bills, the House is impatient to discuss these issues. During the recent debate in Westminster Hall both main Opposition parties set out their position, but we had no such transparency from the Government. When will the Leader of the House set out the Government's position, and will she now confirm that the debate will be held on a substantive motion ending in a vote?
	If the Government intend to amend the Constitutional Reform and Governance Bill, which is due to be debated next week, to implement proposals from the Kelly report, and, as some newspapers have suggested, to include a provision for a referendum on voting reform, will the right hon. and learned Lady give the House an extra day in Committee to consider what is already a large and sprawling piece of legislation?
	May I repeat my call, and that of many colleagues throughout the House, for a proper debate in Government time on Afghanistan? The conference on the future of Afghanistan has been scheduled for the end of the month in London. Does the right hon. and learned Lady agree that Members should have their chance to debate the matter in full before that conference, so that they can bring to Ministers the thoughts of their constituents ahead of it?
	Finally, looking at the weeks ahead, does the Leader of the House agree with me, and indeed with some of her right hon. Friends, that we cannot go on like this? The right hon. and learned Lady, who is the deputy leader of the Labour party, finally issued a statement of support for the Prime Minister at 6 o'clock last night, saying that Ministers were getting on with the business of government. She was so involved in her own business that she could not even vote yesterday afternoon for a House motion that was tabled in her own name. Is not the truth that instead of a secret ballot of Labour MPs for a new leader, what the country really needs is a ballot of the whole country for a new Government?

Harriet Harman: I would like to add to the right hon. Gentleman's comments thanking the staff of the House. The House did not rise until about 11 o'clock on Tuesday, which left it very late for Officers and staff of the House to get home. We ought to pay tribute to them for the fact that the House has continued to operate, not least so that we could hear the urgent question answered today about the efforts that need to be taken to help people carry on with their work as usual during the cold weather.
	The right hon. Gentleman asked about the announcements about the recess, which will be made in the usual way. He also asked about the management of the economy. There will be a pre-Budget report debate after business questions, and there will be further stages of the Fiscal Responsibility Bill, allowing all such issues to be debated. We heard the Prime Minister reassure the country again at Prime Minister's Question Time yesterday that we would ensure that we have a secure recovery, that we do not pull the plugs on the recovery, that we tackle the deficit by having fair tax measures and that we make sensible and fair choices about public spending. The public can be reassured that that is the Government's position, even though there is something of a muddle about the matter on the Tory Benches.
	As far as the Wright Committee report is concerned, the Prime Minister said yesterday that he welcomed it and that there would be an opportunity for the House to debate and decide on the issues in question. As the right hon. Gentleman reminded the House, we have already had a 90-minute debate in Westminster Hall on 15 December, in which 17 colleagues participated. We made some progress in the motion that the House adopted last night, which he mentioned. We have not stood still, and the direction of travel is clear. It was I who tabled the motion to take the matter forward on behalf of the Government. It is a complex matter on which the Government will have to take views, but it is not for us to dictate to the House on it. It is for us to facilitate progress on a consensual basis, which is what we will do. We want further progress to be made.
	As far as the Constitutional Reform and Governance Bill is concerned, we will have to consider whether extra measures should be brought forward to ensure that the House has enough time to debate it on the Floor of the House.
	The right hon. Gentleman mentioned the important issue of Afghanistan. I said before Christmas, and reiterate today, that we want to be absolutely sure that the House can hold Ministers to account and that there can be debates so that views can be put forward. A lot of concern was raised in business questions in December about the need to have a substantive debate on Afghanistan in January. Although I have not been able to announce it today, I am aware of the time scale that the shadow Leader of the House pointed out. I reassure colleagues that I am determined that we will have a substantive debate on Afghanistan before the end of the month.

David Heath: One of the Members of Parliament who participated in the debate in Westminster Hall that the Leader of the House mentioned was David Taylor. He intervened when I was making my comments, and within a few moments of having made his intervention he passed me a note thanking me for allowing him to contribute. That was typical of the courtesy of the man and his ever-presence and value to the House. He will be very much missed.
	On the Wright Committee report, this simply will not do. There is only one thing that the Government have to do: take the page of the report that contains the draft motion and put it on the Order Paper. Nothing else is needed. The Leader of the House says that she is facilitating matters, but she is doing so exceedingly slowly. I ask her to hurry up and simply put that motion before the House, and then I hope we can make progress.
	When can we expect a debate on the special report from the Information Commissioner following the veto by the Secretary of State for Justice of the release of Government papers, in contravention of the Information Commissioner's decision and prior to a tribunal hearing? That is unprecedented, and it is necessary for that report, which is to the House, not the Government, to be debated, and for the Secretary of State to justify his actions. When will that happen?
	May we have a statement from the Health Secretary on the intention from the beginning of the next financial year to consolidate the assets of hospital charities into the general NHS budget? That is very much resented by those who work tirelessly to raise funds in support of their local hospital. It cannot be right that it is going to happen, and I hope that the House will have the opportunity to express an opinion on it.
	May we have a statement from the Chancellor of the Exchequer in due course on the supervisory review of the failed banks by the Financial Services Authority? There is some suggestion that it will not even published, which I hope is not the case. I hope that the Government can assure the House that it will be published and that a statement will be made in the House about its contents, because it is of absolute importance that we understand why the banks got this country into the mess that it is in and that we can assign responsibility appropriately.
	Lastly, may we have a statement in due course on bilateral relations between the United Kingdom and Iceland, because there is clearly a full-scale constitutional crisis in that country as well as an economic one? That has huge ramifications for the United Kingdom, not least for the £830 million of taxpayers' money from local authorities that is still to be recovered from that small country with its enormous debts. May we have a clarification from the Government as to what the position is at the earliest opportunity and an opportunity to debate the matter?

Harriet Harman: I can assure the hon. Gentleman, as I have the shadow Leader of the House, that we intend to make progress on the Wright Committee's report. I reiterate that that Committee's work was not foisted on us: we actually welcomed the proposal made by my hon. Friend the Member for Cannock Chase (Dr. Wright) to set up the Committee and swiftly brought forward the resolution to establish it. We are grateful for the work that it did, including over the summer recess, and we want to ensure that it is built upon and taken forward.
	As far as the freedom of information request and the veto is concerned, there was a full statement on that by the Justice Secretary on-I think-10 December.

David Heath: A written statement.

Harriet Harman: I beg the hon. Gentleman's pardon-he is right that it was a written ministerial statement. I think I remember that that statement contained the information that there were something like 16,000 routine FOI requests, of which only two have been vetoed, so it was a very exceptional occurrence, which is why things were spelt out in a written ministerial statement. The framework that is set down by the Freedom of Information Act 2000 was followed as part of that process. [Official Report, 13 January 2010, Vol. 503, c. 7-8MC.]
	As for charities, resources and the health service, there are Health questions next week, so the hon. Gentleman could look for an opportunity to raise that issue. If his question goes wider to include the funding of charities as part of the contribution to our health services, he might find an opportunity to catch Mr. Speaker's eye in the debate on the pre-Budget report, which will happen immediately after business questions.
	On financial regulation, the hon. Gentleman will know that the House has devoted a considerable amount of time-and rightly so-to the question of the regulation of financial services since the global credit crisis was precipitated in the United States. That has meant more work to toughen up the regime of the Financial Services Authority, the Financial Services Bill and international action so that we can work with other countries to ensure that this contagion of a lack of confidence in financial services does not spread with such devastating consequences as it did before. He will know that such things are constantly on the Treasury's agenda, the business Department's agenda and the House's agenda.
	On the UK and Iceland-as it happens, the Netherlands is also involved-the UK Government stepped in. That was part of the action that we have taken so that people have not been left to sink or swim during the recession. Just as we have taken action to protect people who are at risk of losing their jobs, protected small businesses and protected people from losing their homes, we have taken action to protect people with deposits in Icelandic banks. That is all part of the action that has necessarily resulted in an increase in the deficit. Who would say that it was not worth increasing the deficit to make sure that we protect not only people's deposits in Icelandic banks, but confidence in financial services by the action that this Government have taken? All those things are part of what has built up the deficit. The next time anybody says that we should not have allowed public debt to rise, they should say where they think we should not have taken the action that has been so important. We will carry on with our bilateral work between not only ourselves and Iceland, but our European colleagues, to make sure that Iceland plays its part in paying back what it owes to the Government and people in this country.

Several hon. Members: rose -

Mr. Speaker: Order. Twenty-five right hon. and hon. Members are seeking to catch my eye. As always, I should like to be able to accommodate everybody, but short questions and short answers will be required if there is any chance of doing so.

Gerald Kaufman: Has my right hon. and learned Friend seen early-day motion 72, on A1 Techsol Ltd, Stockport Road, Manchester, standing in my name and the names of a number of other hon. Gentlemen?
	 [That this House condemns A1 Techsol Ltd, Stockport Road, Manchester, for having failed to return to a constituent of the right hon. Member for Gorton his UK passport, driving licence, bank statements, security officer's badge and photographs, which they required from him on taking up employment with them, and for ignoring repeated requests from the right hon. Member to return this material to his constituent; regards A1 Techsol's retention of this material as both theft and a breach of employment legislation; calls on the Secretary of State for Work and Pensions and the police to investigate; and meanwhile calls on the public to have nothing whatever to do with A1 Techsol, either as employees or in any other way.]
	Will my right hon. and learned Friend ask the Work and Pensions Secretary to investigate the employment practices of that rogue company, and the police to investigate it for possible larceny?

Harriet Harman: I congratulate my right hon. Friend on raising this issue, which is obviously of importance in his constituency. I will do as he suggests and raise the matter with the Work and Pensions Secretary, but he will no doubt have the opportunity to refer it to the police.

Philip Davies: Over the Christmas recess, the  Yorkshire Post reported that the chief constable of West Yorkshire police, Sir Norman Bettison, criticised the fact that burglars were being released from prison early owing to the lack of prison places. May we have an urgent debate about sentencing for burglars and prison places, given that it is causing West Yorkshire police lots of trouble that they otherwise would not have had, and completely unnecessarily creating extra victims of crime, owing to the incompetence of this Government?

Harriet Harman: There has actually been a fall in the level of crime since this Government came to office and an increase in the number of offenders brought to justice. No one is released from prison on the basis of a lack of prison places. We have increased the number of prison places- [ Interruption. ] Actually, we have done that with finance that the party to which the hon. Gentleman belongs would have opposed. I will not raise his points with the Home Secretary or the Justice Secretary because I think they are ill-founded.

Mark Fisher: Returning to the Wright Committee, do we take it that when the Leader of House says that the House will have the opportunity to decide on its report, she is saying that there will definitely be a substantive motion on which the House will have the opportunity to vote? I hope that that substantive motion will be, as the hon. Member for Somerton and Frome (Mr. Heath) said, on the draft resolution in the back of that excellent report. My right hon. and learned Friend is quite right that the Government can take credit for introducing the Committee, but we now want to see its report put into action.

Harriet Harman: Yesterday in the House of Commons, the Prime Minister said:
	"We are now discussing these issues and they will form the subject of a debate and decisions by this House."-[ Official Report, 6 January 2010; Vol. 503, c. 170.]
	He was obviously right to talk in the plural because, as the Committee itself acknowledges, a number of decisions will need to be taken by the House. Some proposals require further work before they can be brought to the House, but there will be a number of decisions, and we expect to make progress on them and, indeed, the work that came within the remit of the Wright Committee, which arose originally from the work of the Procedure Committee on the election of Deputy Speakers and the introduction of term limits for Mr. Speaker and Deputy Speakers. Those were passed by a resolution of the House yesterday. We will make progress on this matter-not in one big bang, but we will establish the direction of travel on a consensus within this House. Steps will be taken, and the House will vote to see them put into action.

John Greenway: Will the right hon. and learned Lady ask the Secretary of State for Environment, Food and Rural Affairs to come to the House to make a statement on "Food 2030", which was published by the Government on Tuesday morning? It is not available even in the Vote Office, let alone to Members by a statement. Quite apart from that discourtesy to the House, surely we should have a discussion in this Chamber about the document, which talks about the future of farming, food production and the food chain. When so many of our farmers are clearly in real difficulty with the current weather, perhaps we should use the topical debate next Thursday to discuss the document, and the Environment Secretary can answer some questions on it.

Harriet Harman: I welcome the hon. Gentleman's interest in what is a very important report. I will discuss with the Secretary of State whether he thinks there should be an opportunity to bring it to the House to debate. I certainly think it raises some very important issues that probably could benefit from wider debate in the House.

Sally Keeble: Does my right hon. and learned Friend agree that the prime area in which Ministers are held to account is here, in the House of Commons? Does she therefore agree that the failure by the Department for Communities and Local Government to field a Minister for last night's Adjournment debate was a basic failure in accountability? As the debate was about discrimination against minority faiths, the lack of a departmental Minister made the point forcefully. What steps will she take to ensure that Departments understand that private discussions in meetings are no substitute for proper parliamentary accountability here on the Floor of the House?

Harriet Harman: I agree: if something has gone wrong, Ministers should offer a meeting with the hon. Member concerned-and I understand that that has happened in this case-but that is not sufficient. There is something unique about accountability on the Floor of the House, and that is what a Back Bencher seeks when initiating an Adjournment debate. I am grateful to my hon. Friend the Deputy Leader of the House for taking that debate so ably on behalf of the Government. She is committed to those issues, but she is not the accountable Minister, and that is why I will take this up with the Secretary of State. It should not have happened and we need to ensure that it does not happen again.

Patrick Cormack: May I thank the Leader of the House for what she said about David Taylor, who was such an outstanding Back Bencher?
	In the light of Sir Ian Kennedy's comments yesterday, would it not be sensible for the House to make its views known on his proposals so that we do not put the cart before the horse and vote on some Kelly recommendations that Sir Ian may not wish to endorse, bearing in mind that the Independent Parliamentary Standards Authority is now in control?

Harriet Harman: There are some residual issues from Sir Christopher Kelly's report that require legislation to fix them firmly in place. We have agreed to bring those forward in the Constitutional Reform and Governance Bill. As for Sir Ian Kennedy's document on establishing the new scheme for Members' allowances, the framework for it was laid down in the Parliamentary Standards Act 2009, which requires consultation with the Speaker and Members of the House, and I understand that Sir Ian has announced a wider five-week consultation with the public on the document through a website. It is now the responsibility of IPSA to take that forward independently. Individual Members can respond to the consultation and we can put forward our views, but Professor Sir Ian Kennedy is responsible for proposing the scheme as chairman of IPSA, and that is what he will do under the framework that has been laid down.

Gordon Prentice: Will the Government table their own amendments to the Constitutional Reform and Governance Bill to ban non-doms from serving in Parliament, or will Ministers rely on my amendment?

Harriet Harman: That is an important issue, although I was not aware that my hon. Friend had tabled such an amendment. It sounds like a very good idea and I thank him for bringing it to the attention of the House. If he gets the chance to move his amendment, perhaps it will provide an opportunity for those on the Opposition Benches to say whether the deputy chair of the Tory party is actually resident for tax purposes.

Jo Swinson: I very much welcome the Leader of the House's warm words about the Wright Committee proposals for reform of the House of Commons, and in particular her suggestion that we will need to go even further and build on them. That is an excellent and necessary idea. As a first step, will she place the Committee's draft motion on the Order Paper for a free vote in this House-yes or no?

Harriet Harman: We are consulting the Opposition parties to ensure that the motion that we table has the broadest possible agreement across the House. Of course it will be a free vote, as it is House business, not Government business.

David Cairns: Can my right hon. and learned Friend find time for a debate on the Government's overseas aid policy? She will be aware that a wind of vicious homophobic oppression is blowing through large parts of Africa, including in countries to which we contribute significant sums of aid development money. Other than the routine expressions of outrage that we make in diplomatic circles, can she enlighten us as to what actual leverage we have with some of these countries, such as Uganda and Malawi, that will demonstrate to them the complete unacceptability of the course of action on which they have embarked, as it will see innocent men and women sentenced to life imprisonment or to death just for being gay?

Harriet Harman: My hon. Friend raises a very important point. This is a fundamental, basic human rights issue of great concern to the Government and the international community. I will raise his points about overseas aid in that specific respect with the Secretary of State for International Development.

Stewart Jackson: May we have a debate on benefit entitlement? We learnt yesterday that Anjem Choudary, the putative leader of Islam4UK which plans a despicable march through Wootton Bassett, is in receipt of £25,000 of benefits, compared with the average wage of our brave soldiers in Afghanistan of £17,000. My constituents do not understand that distorted sense of priorities in our benefit system. Does the Leader of the House agree that we need an urgent debate to talk about such issues?

Harriet Harman: If the hon. Gentleman believes that the benefit system has been misapplied in this case, he can bring it to the attention of the relevant authorities. If it is a question of the structure of the benefit system, I suggest that he seeks an opportunity to raise it at Work and Pensions questions and makes his own proposals on how the benefit system should be changed.

Jim Sheridan: My right hon. and learned Friend may be aware that during the festive period a major holiday provider in Scotland, Flyglobespan, went into receivership, resulting in hundreds of job losses and thousands of families losing their holidays. Will she use her good offices to facilitate an investigation into the circumstances surrounding that company so that we may explore what lessons can be learned and, just as importantly, ensure that the workers' interests are taken into account and the families receive compensation?

Harriet Harman: My hon. Friend makes an important point, and I am sure that my colleagues in the Department for Business, Innovation and Skills will be concerned to investigate the circumstances surrounding the receivership of that company. I join my hon. Friend in expressing sympathy to the thousands of families affected and the employees whose livelihoods have been so devastatingly affected.

Alistair Carmichael: May we have an early debate on the situation in Gaza? There is growing concern on both sides of the House about the desperate and deteriorating humanitarian situation, and a debate would allow Ministers from the Foreign Office to explain what they are doing to bring about a change of mind on the part of Egypt, which is currently blocking a humanitarian convoy.

Harriet Harman: I am aware of the general intensification of concern about this issue, not least as reflected by the hon. Gentleman and by questions to the Prime Minister yesterday. I shall perhaps discuss with the Foreign Secretary the best way to ensure that the concerns of the House are properly aired and debated, so that he has a chance to respond and the way forward is made clear.

Tom Watson: The hon. Member for East Dunbartonshire (Jo Swinson) leads an impressive campaign for fashion magazines clearly to label doctored and airbrushed images of professional models. I support that campaign and, after the pre-election launches this week, I think that it should be extended to political propaganda. Does my right hon. and learned Friend agree that in the new age of parliamentary transparency there should be no role for Ken Barbie doll politicians?

Harriet Harman: I agree with my hon. Friend. I fully support the hon. Lady's excellent campaign. There is nothing wrong with older women, and we do not need airbrushing. I also agree that no amount of airbrushing will conceal the truth behind the Tory tax muddle. It might be a new, airbrushed face, but it is still the same old Tories.

Nicholas Winterton: It would be particularly appropriate at this time to have a topical debate on the Met Office, which costs taxpayers about £200 million a year. Surely it is time to stop treating the serial inaccuracy of the Met Office's forecasts as just a joke. It has become a scandal; it looks as if it has been hijacked by the climate change lobby. May we have a topical debate very soon on the subject?

Harriet Harman: The problem is not the Met Office but the challenge of climate change. There is a micro-climatic problem on the Tory Back Benches, which perhaps I could refer to the Tory Front Benchers.

David Drew: On Monday, the Leader of the Opposition paid a visit to the Stroud constituency-a fine place to come to, if I may say so. When asked by a journalist what difference a Conservative MP would make to the people of Stroud and Gloucester, he was quoted as saying:
	"They will make a big difference. They'll do what they say. The problem with the current MPs is they say they're going to defend the Post Office but they go to Parliament and vote against it, they say they're going to defend community health services but they go to Parliament and vote the other way...you would have a bunch of"-
	Tory-
	"MPs committed to this area."
	Given that my right hon. and learned Friend protects the rights of Back Benchers, may I suggest that she tell the Opposition, in the nicest possible way, to get some decent researchers? They could have looked at my voting record. More particularly, would she support my demand for a retraction, so that we can get some honesty back into politics and get people who are straight with the electorate for once?

Harriet Harman: I certainly agree with my hon. Friend. It sounds like he is suggesting something like "Ofpol" to monitor the Opposition. They say different things in different parts of the country and different things to the newspapers from what they say in the House. The one consistent thing is that none of it adds up.

Damian Green: In the early days of this bout of bad weather, when the channel tunnel was closed because the trains could not run, Operation Stack was applied. That means that the M20 is closed and used as a lorry park. It happens regularly, and it does not just mean misery for my constituents and others in Kent; it cuts the most important freight route in the country. Given that, could the right hon. and learned Lady arrange for the Department for Transport to come to the House and make a statement? The regular application of Operation Stack is not just a local and regional problem, but a national and serious economic one. For various reasons, it is happening more and more often, and it is time for national Government to take some responsibility for this long-running problem.

Harriet Harman: I can see that the issue has national implications, but it might be a good idea for the hon. Gentleman and a group of MPs for the constituencies most directly affected to get together with the responsible Transport and Business Ministers and discuss whether the framework needs to be changed. No doubt the regional development agency would also need to be involved. I suggest that he takes that forward. However, if he wants to make another suggestion, perhaps he can make it to me and I can follow it up.

Tom Levitt: Will my right hon. and learned Friend urgently arrange for lessons in GCSE geography to be made available to certain Members of the House who do not appear to be aware that when the planet warms up, warm air moves to the poles, pushing cold air down into areas such as ours? Global warming, therefore, produces extremes of weather, both hot and cold. Does she agree that the problem of global warming requires global leadership, and will she assure the House that the Prime Minister will continue to provide that leadership undeterred by recent events?

Harriet Harman: We are able to play our part in the global effort to focus on climate change-obviously it has to be tackled nationally as well as globally-only because the Prime Minister and the Government are absolutely clear that climate change is one of the biggest challenges facing the planet, that we understand the science that lies underneath it, and that we are determined to take action to tackle it. I strongly agree with my hon. Friend.

John Hayes: You will know, Mr. Deputy Speaker, that there was a statement in the House this week on aviation and border security. It included a section on the risk of radicalisation and extremism in our universities. The statement made it clear that
	"the Department for Business, Innovation and Skills has published guidance on managing the risk of violent extremism"-[ Official Report, 5 January 2010; Vol. 503, c. 30.]-
	in higher education. However, it is not clear when that guidance was published. This is a dynamic subject; the risks and intelligence change, and the guidance needs to change too. May we have a statement ensuring that the guidance is updated and published so that Members can see that it is relevant and fit for purpose?

Harriet Harman: The Prevent programme, preventing radical extremism, is important not only in the Department for Communities and Local Government but, as the hon. Gentleman said, in the Department for Business, Innovation and Skills, given that it involves issues of further and higher education. There are Business, Innovation and Skills questions next Thursday. Perhaps he will seek an opportunity to raise the issue directly with Business Ministers.

Several hon. Members: rose -

Mr. Deputy Speaker: Order. May I point out that questions are starting to get a bit long? I want to try to get everybody in. We have an important debate to follow, so I hope that colleagues will be as helpful as possible.

Colin Challen: May I draw the attention of my right hon. and learned Friend to my early-day motion 259 on the east coast main line franchise?
	 [That this House notes with concern the timetable the Government has set for the refranchising of East Coast main line services; and calls on the Government to maintain the East Coast main line in public ownership so that the quality, effectiveness and competitiveness of public ownership can be fully demonstrated.]
	May we have an early debate on the subject so that we can get a better understanding of why the Government remain wedded to the idiotic and fanciful privatisation of the railways bequeathed to us by the Conservative party? Many of us hoped that the east coast main line could be a public service comparator, so that we can judge other companies.

Harriet Harman: We remain concerned to continue to improve our rail services, including the east coast main line, and I will draw my hon. Friend's point to the attention of the Secretary of State for Transport.

Evan Harris: Concern has been raised across the House about whether the Government actually support the recommendations of the Wright Committee report. The right hon. and learned Lady sought to reassure the House today, which I welcome. On that constructive note, may I ask whether she would be willing to meet a delegation of Wright Committee members to discuss where she feels that the recommendations need building on, so that there is no misunderstanding and to ensure that her motives, and those of the Government, are not misinterpreted in the way that she feels that they have been? Perhaps a meeting next week would suffice.

Harriet Harman: The Select Committee recognised that some of the proposals needed more work to take them forward. Above all, I would like to reassure the hon. Gentleman that the Government will facilitate proposals for debate and decision in the House, but there is no way we expect this to become a Government issue. It is a House issue, and we will ensure that we facilitate its ability to look across the piece and make progress on those issues.

Alistair Burt: My constituents are extremely concerned about the quality and speed of communication between major Departments. Yesterday, it seemed to take an inordinately long time for the message to go from the Prime Minister to the Foreign Secretary, "Get out there and say something." In view of concerns about what would happen were there a greater national calamity, can the Leader of the House assure us that communication will be rather quicker in the future?

Harriet Harman: The Foreign Secretary is getting out there and doing his job, which is what the Prime Minister, and indeed the whole country, would expect him to do. That is exactly what he is doing.

Nigel Evans: The Leader of the House will be aware of my early-day motion 529 on the proposed march by Islamic extremists through Wootton Bassett.
	 [That this House notes that Anjem Choudary, the UK leader of al-Muhajiroun, plans to stage a march through Wootton Bassett town carrying empty coffins as a protest against Britain's presence in Afghanistan; considers that such a demonstration would be a gross mark of disrespect to the soldiers who have died or been wounded in Afghanistan, their families and those who continue to fight on active service in Afghanistan; believes that such a march would cause great distress to those who have lost loved ones; further notes that the Muslim Council of Britain has described the proposed march as 'deplorable'; calls on the Home Secretary urgently to investigate the breaching of public order and other related offences; and urges Wootton Bassett Town Council and Wiltshire Police to ensure that any proposed demonstration that breaches the Public Order Act 1986 be rightly refused.]
	Would it be possible to have a statement from the Home Secretary about what powers local authorities and police authorities have in relation to such a march? Does she agree that if the march went ahead, it would be a slight against not only the memory of our heroic servicemen and women returning to the United Kingdom, but the great people of Wootton Bassett who turn out in such great numbers to respect our war dead?

Harriet Harman: I very much understand the hon. Gentleman's concerns. I understand that the police have not yet received notification of any such procession taking place. If notification is given, there are powers under public order legislation for the police to impose conditions subject to the consent of the Home Secretary, and indeed to deny the opportunity for the march to take place. The Home Secretary has said that he will look sympathetically on any application made by the police in that respect.

Philip Hollobone: Residents and shopkeepers up and down the country are frightened of clearing pavements in front of their properties of snow and ice for fear of being sued should any pedestrians fall over on that section of public pavement. During the urgent question, I asked the Transport Minister if he would look at changing the law to protect residents and shopkeepers in such cases, and he said that he had no power to do so. Will the Leader of the House ask the Justice Secretary to make a statement about how the law could be changed to protect residents and shopkeepers in such circumstances?

Harriet Harman: The Transport Minister was saying that people should be protected from the unreasonable fear, which is not founded on reality, that if they look to protect the forecourt of their business or help their neighbours they will be sued. The health and safety laws are important for protecting public health-for example, in the E. coli outbreaks that we have seen in city farms and suchlike. Those on the Opposition Benches are quick enough, if the public are not protected, to expect the Government to have effective regulations in place to protect them. However, nobody should go round encouraging the notion that there are nonsensical provisions waiting to entrap people who are using their common sense. There are not. I therefore assure the hon. Gentleman's constituents, as the Transport Minister did, that everybody can do what is commonsensical. If it is commonsensical, we can be pretty certain that it will be absolutely within the law.

David Gauke: May we have a debate on the timeliness and clarity of ministerial responses? All Members from time to time have concerns about responses to parliamentary questions or correspondence with Ministers. However, I am thinking in particular of the delay of some hours yesterday among senior Ministers, including the Leader of the House, in responding to the simple question of whether they supported the Prime Minister, and of the equivocal and evasive nature of many of their answers.

Harriet Harman: All the statements that have been made have been made on numerous occasions, including yesterday. I am going to continue with my view on such questions, which is that I do not respond to them when we are being asked about the business of the House.

Maria Miller: Some 2,500 of my constituents and those of my right hon. Friend the shadow Leader of the House have been without electricity over the past two days as a result of the adverse weather, and this in a period of sub-zero temperatures. We urgently need a broader statement from the Government on how the severe weather is being handled. Indeed, I find it extraordinary that the Government should have relied on a Conservative urgent question, tabled today, for the problem to be discussed in the House.

Harriet Harman: I do not think that it matters where an urgent question comes from. If it is an important urgent question, on which Members from all parts of the House want to join in and ask questions, and if it is granted by the Speaker, it can be a positive contribution to debate in the House. It is no skin off anybody's nose for that to happen. There will be an opportunity next week to discuss energy security on an Opposition day motion. In anticipation of that debate, I can say that the National Grid Company has said that because of the cold weather there is unprecedented demand on our energy supplies, as one would expect, but that it is confident that supplies will be sustained. Indeed, the important work of repairing energy lines that are affected by falling trees cutting energy supplies is also an issue. However, there is no reason why there should not be an opportunity to ask questions in the meantime, and to debate them further next Wednesday.

Andrew Pelling: Does the Leader of the House share my concern that 4,600 households in Shirley, Croydon were without power during this cold period? Unfortunately, the problem is not just weather-related, because there were cuts on Christmas eve and on previous days too, when the weather was clement. Does she think that I will be able to get away with dealing with this Croydon issue in a debate on energy security?

Harriet Harman: I suggest that the hon. Gentleman raise the issue directly with the relevant Ministers. I will alert them to the fact that he wants to raise the issue on behalf of his constituents and see whether he can deal with it by correspondence, a meeting or further discussion.

Point of Order

Philip Davies: On a point of order, Mr. Deputy Speaker. Earlier in business questions, which I am sure you were following avidly, the Leader of the House clearly said that nobody had been released from prison early because of overcrowding. That is surprising, given that the Government introduced a scheme that releases all prisoners 16 days early from prison, specifically because prisons are overcrowded. Given that people following proceedings in the House or reading  Hansard should be able to rely on the accuracy of the things said here, particularly by those on the Government Front Bench, can you ensure that the Leader of the House corrects the record, so that people are not misled about the state of play with regard to prisoners being released from prison?

Mr. Deputy Speaker: No, I cannot. However, if the Leader of the House wishes to catch my eye, further to the point that the hon. Gentleman has raised, which is not strictly a point of order, I am sure that she will try to help.

Harriet Harman: Further to that point of order, Mr. Deputy Speaker. I am grateful to the hon. Member for Shipley (Philip Davies) for bringing that issue to my attention. What I meant was that nobody is released outwith the framework that the Justice Secretary has presented to the House in respect of the overall approach to the provision of early release, which is a well established pattern that has been followed not only by this Government, but by previous Governments.

Mr. Deputy Speaker: I am grateful to the Leader of the House. I hope that everyone is clear and happy about the situation.

Pre-Budget Report

[Relevant documents:  The  Fourth Report from the Treasury Committee, Pre-Budget Report 2009, HC 180; and the Third Report from the Joint Committee on Human Rights, Legislative Scrutiny: Financial Services Bill and the Pre-Budget Report, HC 184.]

Liam Byrne: I beg to move,
	That this House has considered the matter of the Pre-Budget Report.
	I welcome the chance to open today's debate, the first on the pre-Budget report. I welcome it because decisions as significant as these should be tested in debate, so that the House and the public whom we represent can see clearly where each party stands and, amidst the arguments that we have in the media and elsewhere outside, where the policy of each party really rests.
	We on the Government Benches are very clear about where we stand. We stand on the side of workers, businesses and home owners, who need protection from the worst global recession in 60 years, and for locking in recovery. We stand for taking the difficult decisions that will be needed to halve the deficit over the four years to come, while protecting our priorities for public services. We also stand for investing in growth, new jobs, new industries and new infrastructure that together will be vital in balancing our economy better in the years to come.
	I hope that the crispness and clarity of our position in this debate will be matched, especially by the Opposition. This week, policy pose after policy pose has given way to position after position, sometimes with up to three difference stances in one afternoon. However, credit where credit is due: the Opposition are nothing if not nimble, as they hop madly between constituencies that they are so desperate to please. We will have none of that on this side of the House, so let me use the few minutes allotted to me this afternoon to set out some of the measures that my right hon. Friend the Chancellor presented before Christmas.

Kelvin Hopkins: To reinforce the points that my right hon. Friend has just made, has he seen page 24 of  The Guardian today, which says, "Demand for gilts at its highest for nine months," and "Service sector recovery raises hopes of end to UK recession"? The Government must be getting something right, and the Tories must be completely wrong.

Liam Byrne: I am grateful to my hon. Friend for bringing page 24 of  The Guardian to the House's attention. I will address some of those points shortly.

Andrew Tyrie: Will the right hon. Gentleman give way?

Liam Byrne: I will give way in a moment.
	The first objective of our policy as set out in the pre-Budget report is, of course, to secure the recovery. When we look back over the year that has passed, we are glad that we ignored the idiosyncratic advice proffered by the Opposition and, instead of doing nothing, as they suggested, chose to act: to rescue the banking system from the brink of collapse; to cut VAT; to invest £5 billion in jobcentres, which have helped 3 million people out of unemployment in the past year; to introduce measures to allow families to stay in their homes, helping to ensure that repossessions are two times lower than in the 1990s recession; and to set up the Time to Pay scheme, which has helped more 160,000 businesses to spread their tax payments over a timetable that they can afford, helping to keep insolvency rates three times lower than in the 1990s.
	In the pre-Budget report, the Chancellor forecast a return to growth, but as we know, over the next period unemployment may continue to rise in the short term. So to lock in the recovery, the Chancellor said that he was able to do more: by extending the Time to Pay scheme for as long as it is needed; by deferring the proposed increase in corporation tax for smaller companies, leaving the 2010 tax rate unchanged for nearly 900,000 small businesses; by freezing support for mortgage interest at 6.08 per cent. for six months more, to help people who are worried about their mortgage payments; and, perhaps most importantly, by ensuring that every 18 to 24-year-old who has been out of work for more than six months is offered the chance of a job, training or community service.
	However, the second point made by the Chancellor in the pre-Budget report is about looking ahead-to the years beyond 2010 and the return to growth and prosperity in the years to come. I am afraid that those years of growth will not be years without difficult decisions-indeed, they will be full of them-and especially not without the decisions needed to halve the deficit and protect our priorities in public services. We have said that, in our judgment, the right time frame over which to execute this difficult decision is the 48 months up to the end of 2013-14.

Greg Hands: I want to ask the Minister about the exchange on this subject during Prime Minister's Questions yesterday. The Prime Minister said:
	"We have published a deficit reduction plan".
	He went on to say:
	"It includes cuts in some of the major Departments".-[ Official Report, 6 January 2010; Vol. 503, c. 162.]
	Can the Chief Secretary tell us where in any published Treasury document we can find details of those departmental cuts?

Liam Byrne: Let me explain that in detail in a moment.
	It is fair to say that the Conservatives have questioned our judgment that four years is the right time frame over which to halve the deficit, but their questioning has been in the style and manner of rather open-ended, slightly ponderous thinking aloud. They have not offered an alternative proposition, such as reducing our four-year time frame to three. They know what the price of such a move would be, and they seem unsure whether they want to pay it.

Philip Hollobone: It is not only the Opposition who are questioning the Government's debt reduction plans. The bond markets around the world are also doing so, and I was alarmed to read yesterday that the world's biggest bond house, PIMCO, which is based in the United States, has said that there is an 80 per cent. chance of Britain losing its triple A sovereign debt rating. That would result in increased mortgage and borrowing costs for the whole UK economy.

Liam Byrne: That is an important point that I will address directly in a moment.
	First, let me return to the question of the level of detail, because the House is right to ask how the sums will add up in 2013-14. In framing my remarks, I should like to draw on the excellent report from the Treasury Select Committee and the evidence presented to the Committee by the Chancellor and by Her Majesty's chief economic adviser.
	Our judgment is that the deficit must fall from £178 billion this year to £96 billion in 2013-14, a fall of £82 billion. We anticipate that £25 billion of that sum will come from growth, and the return to business as usual, including the reversion of the VAT rate, but, as the Chancellor said to the Treasury Committee, £57 billion must come from discretionary action-in other words, decisions. As the chief economic adviser said to the Committee, we have decided to deliver two thirds of that sum through spending, and one third through new taxes. On decisions on tax, we have set out plans to raise £19 billion from new taxes, which we have sought to introduce in a fair way by ensuring that 60 per cent. of them are paid by the top 5 per cent. of earners in this country. That leaves £38 billion to be secured from spending cuts.
	Capital investment must fall, as it safely can, from today's historically unprecedented level. In the 2008 pre-Budget report and the 2009 Budget, we announced substantial reductions to the overall capital spending budget, and that is set out on page 189 of the pre-Budget report book. Yes, Departments will have to cut back, which is why we have reduced our plans for current expenditure from 2011 onwards.
	That is why this pre-Budget report, together with the command paper "Putting the Frontline First", announced £20 billion of cuts and efficiencies. If the House will bear with me, I think that it will be helpful if I run through them. They include: £8 billion to be delivered by 2012-13, identified across the public sector through cutbacks in Whitehall through the operational efficiency programme; £600 million from the greater use of online systems to deliver public services; £650 million from cuts in consultancy, marketing and communication spending across government; £550 million from cutting back on quangos and arm's-length bodies; £550 million from local government, including reducing the costs of inspection; £140 million from cutting senior civil service costs by 20 per cent.; £1.4 billion from ending temporary employment measures as unemployment falls; £850 million from delaying things that can wait, or from cutting back systems such as the NHS IT programme; £900 million from asking businesses and students to pay a little more for training; £360 million from reforming the criminal justice system and legal aid; and £730 million from focusing regeneration and transport spending on areas where it is needed most.
	Of course, to this sum may be added the windfall of lower unemployment. For the purpose of the PBR, we made the extremely cautious assumption that unemployment would not fall. In fact, if unemployment does indeed come down, as we expect it to, the benefits bill will be billions of pounds lower. It is also possible that, as the economy grows faster-as the Bank of England has projected-there will be further fruits of growth in the years to come.
	The House will rightly ask how such windfalls will be put to use. I will state the position bluntly, by repeating what the Chancellor said to the Treasury Committee. He said that, in the event that growth turns out to be more robust than in his forecast, borrowing would naturally fall faster, and that it would then be possible to reduce the structural deficit further in the medium term.

Derek Twigg: I received some figures this morning from my local authority. They show that, in August 1985, the youth unemployment rate was 19.1 per cent. My right hon. Friend has made a good point about people getting back into work and no longer claiming benefit. We have to have cuts and efficiency savings, but we do not want to go back to those unemployment rates. I urge him to ensure that we have continual growth to provide jobs, particularly for our young people.

Liam Byrne: My hon. Friend is absolutely right. The fact that unemployment is so much lower now is a result of many of the actions that we took to ensure that businesses had flexibility over cash flow and that there was guaranteed new help for young people after nine months. We were, however, conscious of the need to do more than that, which is why we said in the pre-Budget report that no young person should be out of work for longer than six months without being offered a job, training or community service.

Nicholas Winterton: I want the Government's plans to succeed and the economy to grow, but will the Minister now deal with the question most appropriately put by my hon. Friend the Member for Kettering (Mr. Hollobone)? Would not the plans that the Minister has announced be derailed if our huge deficit caused a loss of confidence in the international monetary market and our credit rating was reduced, with all the horrors that would result from that? Will the Minister now deal with that question, because it is critical to what he is saying now?

Liam Byrne: I am going to ask for the hon. Gentleman's patience for just a minute or two longer while I make one further point.

Philip Hammond: Will the Minister give way?

Liam Byrne: I will address this point before I give way.
	The pre-Budget report set out plans to rebalance our economy in the years to come. In the Budget, we said that we would do this through fair tax increases and the tighter control of public spending, to ensure that long-term interest rates were kept low. That point has often been made by the hon. Member for Runnymede and Weybridge (Mr. Hammond). There are now great strengths on which we can build in the years to come. We have low interest rates and low inflation. We also have the most flexible labour market in Europe, the lowest rate of corporation tax in the G7 and a competition regime that is among the best in the world. That is why we are judged to be one of the best places in the world in which to do business and to attract inward investment.
	The pre-Budget report develops those strengths. It sets out how we will maintain our leadership in the low-carbon sector, how we will boost investment in our national infrastructure and skills, and how we will support our world-class high-tech industries. Over the next year or two, we will extend by £500 million the amount of lending available to small and medium-sized enterprises, through a 12-month extension of the enterprise finance guarantee scheme. We have created a new growth capital fund, with a new £325 million. We have created Infrastructure UK, which will help to accelerate private sector investment in new infrastructure. We are proposing to introduce a patent box, which is a reduced rate of corporation tax applying to income from patents from April 2013. We have also proposed £200 million for the strategic investment fund, of which £150 million will be routed to support low-carbon investment. We are doubling the UK's commitment to funding carbon capture and storage demonstration sites from two to four. We are increasing support for low-carbon vehicles and setting out additional funding for low-carbon industries and energy efficiency, including Warm Front. Those are all policies-indeed, all ambitions-in which the Conservative party has little interest.

Philip Hammond: The Minister has moved swiftly on from the question that the hon. Member for Halton (Derek Twigg) asked him, but, before we lose the point, will he confirm that youth unemployment in Britain is now at a record high level?

Liam Byrne: Youth unemployment, in my view, is too high, but the hon. Gentleman will recognise that something like 200,000 to 250,000 of the numbers in the current count provided by the International Labour Organisation include those in full-time education who may be looking for part-time work. The hon. Gentleman is wrong to bandy around figures in headline terms in a debate such as this without setting out some of the detail.

Several hon. Members: rose -

Liam Byrne: Let me deal with the points about bonds, which were raised by the hon. Member for Kettering (Mr. Hollobone), after which I will give way again.
	I hope that over the hours to come, we get a chance to explore some of the myths thrown around during the last week, starting perhaps with the most important question of whether our plan to cut the deficit is fast enough. Is it fast enough, for example, for the people who buy our bonds? We have heard a lot about the intentions of PIMCO and some of the quotations bandied around the House to date have, of course, been a bit selective and one-sided, if I may say so. PIMCO, reflecting on the flight to safety that brought buyers to UK bonds and brought gilt rates so low is naturally thinking about divestment into riskier assets as the world economy returns to its former state. This is not a new notion, as that was said last July.
	Is the plan fast enough for the Governor of the Bank of England? The shadow Chancellor is fond of quoting the Governor. The shadow Chancellor is not in his place.

Simon Burns: Neither is the Chancellor.

Liam Byrne: No, indeed. In fact, the full answer from the Governor of the Bank of England on this question paints a very different picture. He gave his answer in evidence to the Treasury Select Committee, saying:
	"It is certainly true that if you eliminate the deficit too aggressively it will have an adverse consequence."
	He went on to say:
	"You have to take action to bring down the deficit of the size we have-it is a very large structural deficit-but to do so at a rate that is consistent with the restoration of growth in the economy".
	That is why we propose to reduce the structural deficit from 9 per cent. to 3.6 per cent. in the space of just one Parliament.
	Is our deficit reduction plan fast enough for the ratings agencies? Again, their views are sometimes traduced in this House, but the reality is that in Moody's analysis published last month, both the US and the UK triple A ratings are described as "resilient"; all three rating agencies have acknowledged the UK has access to particularly deep and liquid capital markets; and on perhaps the ultimate test of demand, gilt auction performance remains strong. Ten-year gilt yields averaged over 11 per cent. in the 1980s; they are now around 4 per cent. I hope that all these arguments and more are debated this afternoon.
	If I were forced to characterise this pre-Budget report, I would say that the sweep of its ambition is matched by the depth of its detail. In the debates that we have had-not only in this place, but in the media and elsewhere, and particularly in the debates the hon. Member for Runnymede and Weybridge and I have had late at night in TV studios around London since 9 December-I am sure that you, Mr. Deputy Speaker, will have been struck like me by the sheer contrast between 212 pages of detail on specific, pressure-tested proposals and the vacuous nonsense of the Conservative party.

Several hon. Members: rose -

Liam Byrne: Before I conclude, I will give way to hon. Members.

Andrew Pelling: Because of the impact on the economy, I applaud the Government's cautious approach towards reducing the fiscal deficit, but what is the estimate of the reduction in economic growth that will result from the proposed reductions in spend in the pre-Budget report?

Liam Byrne: The growth forecasts that we have set out are the basic answer to that question. There is, of course, a degree of uncertainty about the future path of growth for our economy. The independent forecast is different from the forecast that the Chancellor presented, while his forecast is rather lower than that presented by the Governor of the Bank of England. It would be difficult, especially this afternoon, for me to decouple these projections for the public finances and those presented for growth.

William Cash: The Treasury Select Committee criticised the temporary operating rule, which in turn, in line with the pre-Budget report of 2009, has been followed by the Fiscal Responsibility Bill, debated yesterday, to implement those provisions. That includes the code for fiscal stability, the principles of which are set out-including the principle that
	"the Government shall publish sufficient information to allow the public to scrutinise the conduct of fiscal policy".
	This includes debt, and provision is made for the definition of debt. I am sure that the Minister will understand it when I say that organisations such as PIMCO and others that are working out the degree of credibility they can ascribe to the Government's position will take account of whether the definitions and the actualité, as they say, of net borrowing are actually true. The Minister knows that we do not agree on that, so is he prepared to spell out the definition of net borrowing? I asked his Front-Bench colleague the same question yesterday and she did not or could not answer. Will he do so now? What is net borrowing?

Liam Byrne: I seem to remember that the hon. Gentleman intervened on the Chancellor earlier in the week, so it will not surprise him to learn that I have nothing to add to the Chancellor's excellent answer provided to the hon. Gentleman at that time.

William Cash: Give me an answer.

Liam Byrne: The hon. Gentleman asks me to go further than the Chancellor's position, which was set out-

Mr. Deputy Speaker: Order. I am sorry to interrupt the right hon. Gentleman, but the hon. Member for Stone (Mr. Cash) should not pursue the answer that he has been given by calling from a sedentary position-irrespective of whether or not he is satisfied with that answer.

Liam Byrne: Thank you, Mr. Deputy Speaker.

Stewart Hosie: Given that the earlier intervention was not answered at all satisfactorily, the Chief Secretary must be able to tell the House what the suppression of gross domestic product growth will be as a result of £57 billion being taken out of the economy-£20 billion as a result of tax rises and £40 billion as a result of spending cuts. To homogenise it altogether in a global growth figure is really not good enough. That is a heck of a lot of money out of the economy, so surely the Government must know the impact of it on the suppression of GDP growth.

Liam Byrne: I am trying to avoid taking the House through what would be a quite complicated economic equation, which no one will be surprised to hear I have not brought with me this afternoon. The hon. Gentleman is looking at only one side of the argument. He will know that when we have such a large structural deficit because of the action we have taken to protect the country from the worst of the economic storm, it is vital to set out for members of the public and for taxpayers, as well as for people who buy our bonds, exactly how we plan to reduce that deficit. We have set out the fastest deficit consolidation plan in the G7. Without that clarity in place, it would be quite possible for long-term interest rates to begin to rise, which would also be damaging to the success of investment in this country in the years to come. The Chancellor has thus set out a central scenario, clarifying what we think is the right judgment to make on public finances and what the consequences for growth will be.

Philip Hammond: I wonder whether part of the disagreement between us is definitional. The Chief Secretary has said that some of the structural deficit we face is the result of the actions taken by the Government to protect people and citizens from the effects of the recession. In my definition, that is part of the cyclical deficit we face, not the structural deficit. Can we be clear about that?

Liam Byrne: I apologise for mis-speaking earlier, but the point I was making is that the plan we have presented involves a rapid-indeed, the most rapid of any G7 country-reduction in the cyclically adjusted deficit: from 9 per cent. this year to 8 per cent. next year and then down to 5.8 per cent. in 2011-12, when we anticipate the economy growing above trend.
	I conclude by saying that I feel very strongly that this pre-Budget report constitutes 212 pages of great detail, which is in complete contrast to the plan-if it can be so characterised-presented by the Conservative party. The truth is that the Conservatives have been love-bombing every audience they can find within easy reach of a press conference, and with that love-bombing has come a new lexicon of ambiguity. Thus, instead of a straight "promise", we now have a "pledge", an "aspiration", a "commitment" or a "No. 1 priority".
	This morning the Leader of the Opposition continued his careless whispers, reassuring listeners to the "Today" programme. He said that he would have to be tough and pull back from the Conservatives' guarantee of 45,000 single rooms in the national health service. It could not be a pledge, he said, but he told the listeners not to worry, because "it is an aspiration". It seems that the Conservatives now cannot stop adding to their now famous "queue" of commitments. We all remember what a Tory queue looks like. We used to call them waiting lists, and they were so long that people often expired before they reached the front.
	The Conservatives' "all things to all people" policy has left them with a £34 billion credibility hole that they cannot airbrush away. If the Shadow Chancellor spent more than 40 per cent. of his time on economics, perhaps the hon. Member for Runnymede and Weybridge would not be in such an embarrassing position this afternoon; but he is, and the whole House is looking forward to seeing whether he can climb out of the hole in which his party leaders have left him.

Philip Hammond: I shall try to match the Chief Secretary's brevity, although I came prepared for Members of the House to be a bit thinner on the ground. Evidently not all experienced the same difficulty that some of us encountered in battling through the snow to get here.
	This is the first opportunity that the House has had to debate the pre-Budget report, the last important economic statement made by the Government before a pre-election Budget which markets will rightly discount. Given the critical state of the public finances, the huge borrowing requirement that must be met, and the fragility of confidence in the United Kingdom economy and United Kingdom Government debt in particular, we would have expected the Government to use this opportunity to send a powerful and unambiguous signal to investors and lenders alike of their determination to get the deficit under control.
	Listening to the Chancellor and the Prime Minister yesterday, and to the Chief Secretary, one would think that the global financial crisis caused the meltdown in Britain's public finances, but that is not what has happened. According to the Treasury's figures, the economic recession accounts for about a quarter of Britain's deficit-that is the cyclical part of the deficit, which economic recovery will eventually eliminate-but three quarters of it is structural, and requires a structural response. The truth is not that the financial crisis has caused the fiscal crisis, but that for many years the global financial boom masked the scale of the underlying fiscal problem as this profligate Government spent the tax receipts that were the proceeds of a series of bubbles in financial assets, and property in particular, as if they were permanent features of the economic landscape. The real structural crisis that needs to be addressed is not caused by the Government's support for the banking system, as they like to imply. In fact, none of this year's £178 billion deficit is directly attributable to support provided for the banks.
	The pre-Budget report was the Government's last chance to set out a credible path to fiscal stability, to put our economy back on the road to sustainable growth and enduring prosperity, and to ensure our triple A credit rating. They blew that chance, and now the country knows beyond doubt that only a change of Government can deliver the economic change that Britain needs. The present Government have shown themselves to be unfit for office by shirking their task in the nation's hour of economic need.

Liam Byrne: I am following the hon. Gentleman's remarks with great interest, and I am grateful to him for giving way so early in his speech. He appears to have changed tack slightly in his critique. For some months he has been saying that we should move faster in reducing the deficit. Is he now accepting that four years is the right time frame within which to halve it?

Philip Hammond: It sounds as though the Chief Secretary has not been listening over the last few months. We have consistently said that we need to start earlier: we need to start reducing the fiscal deficit in the coming year. As he will know, if he has his calculator with him, starting earlier would have a compounded effect throughout that four-year period, and would make a greater impact on the deficit.

Kelvin Hopkins: Will the hon. Gentleman give way?

Philip Hammond: I will, but then I must make some progress.

Kelvin Hopkins: The Conservatives are constantly harping on about borrowing and debt, but the truth is that our gross national debt is still below that of France and Germany, and about half that of Italy and Japan. There is no need for panic. May I suggest that the Tories are trying to make the Government panic simply for electoral advantage, rather than for the benefit of the country?

Philip Hammond: I think that if anyone is running policy for electoral advantage, it is to the Chief Secretary that the hon. Gentleman should address himself.
	The hon. Gentleman is, of course, right about debt. The issue here is the size of the deficit, and the speed with which we are increasing our debt. Ultimately, all of us in this place can talk as much as we like about the debt and the deficit, but what matters is what the people who must finance that deficit, and must continue to finance that debt, believe about the situation and whether we are moving fast enough to deal with it.

Liam Byrne: Will the hon. Gentleman give way?

Philip Hammond: I will, but then I must make some progress.

Liam Byrne: I am enormously grateful to the hon. Gentleman. He will know that our projection is a reduction in the cyclically adjusted deficit from 9 per cent. in 2009-10 to 8 per cent. in 2010-11, but he seems to be saying that it should be falling still faster. What figure does he propose?

Philip Hammond: I am afraid that I am not going to oblige the Chief Secretary. In fact, I think I will adopt the strategy that he adopted in response to the question put to him by my hon. Friend the Member for Stone (Mr. Cash). The day before yesterday, the shadow Chancellor answered the precise question that the Chief Secretary has just asked. I will do what he did in response to my hon. Friend, and refer him to that answer.

William Cash: Will my hon. Friend give way?

Philip Hammond: Very briefly; then I must make some progress.

William Cash: We seem to be going in circles. Does my hon. Friend agree that, contrary to the assertion made by the Chief Secretary, my hon. Friend the Member for Tatton (Mr. Osborne) made it clear that in our estimates of net debt we would include matters such as the private finance initiative, Network Rail and public pensions? Is it not the Government's failure to arrive at the truth of this matter that is undermining their arguments about what the deficit is, and thereby undermining the credit risk rating and the bond markets?

Philip Hammond: My hon. Friend has made a good point, although it is a slightly different point from the one that the Chief Secretary was making to me. Issues relating to definition of the net debt are indeed part of what is undermining the United Kingdom's credibility in international markets.
	Divided Governments are weak Governments. In the run-up to the pre-Budget report we saw acrimony and division within this Government, and since the PBR some may have noticed a degree of continuity in that trend. We have observed the Schools Secretary and the Chancellor playing cat and mouse with each other in public over the education budget, the Work and Pensions Secretary accusing the Chancellor of "astonishing" mistakes-I wonder where she got that idea from-the Health Secretary insisting that his budget would be protected, the Transport Secretary implying that he would resign if railway capital spending was cut; and, all the time, the Chancellor's options being narrowed by the manoeuvring of the Prime Minister and his allies-or perhaps I should say "ally"-intent on creating political dividing lines rather than solving the underlying fiscal problem.
	Yesterday the Deputy Prime Minister, in what was billed as a speech reasserting his support for the Prime Minister, instead comprehensively undermined the Prime Minister's economic strategy, making it clear that he, at least, understands that economic recovery cannot be built on more borrowing and more public spending-hence his decision to let it be known that he was "incandescent" about the content of the pre-Budget report.
	Following those internal semi-public debates within the Government may be great fun for Opposition politicians and journalists in the Westminster village as they seek to identify the winners and losers of each round, but the real losers are the people of Britain and the only winners are the hedge funds, which are quick to spot weakness and indecision and which are now openly speculating against our currency and our sovereign debt.

Kelvin Hopkins: I thank the hon. Gentleman for giving way again. Is it not the case that the massive cuts proposed by the Tories would simply drive up unemployment and make the crisis worse?

Philip Hammond: I wonder whether the hon. Gentleman has made a mistake, and intended to address that question to the Chief Secretary.
	There is a fact here that we must all face: whoever is in government after the next general election will have to cut public spending. Surprisingly, even the Prime Minister on a good day- [Interruption.] The hon. Member for Luton, North (Kelvin Hopkins) does not agree that it will be necessary to cut public spending after the next general election. I think that puts him in a very small minority in the House. We will leave him with his thoughts and perhaps those of the little group around him, but he is well out of the mainstream of current thinking.

Several hon. Members: rose -

Philip Hammond: I will give way in a moment.
	The fact is that this Government are being driven not by the needs of the economy and the medium and long-term best interests of the British people, but by the needs of the Labour party and the insistence of the Prime Minister and the Schools Secretary that the scale of the fiscal problem, the challenge of dealing with it and the true price of not dealing with it are to be concealed at all costs from the British public until after polling day. No price is too high to pay, provided the bill does not arrive until 7 May. No burden is too heavy to bear if it is the Prime Minister's successor who will bear it.
	That is the most systematically reckless, cynical and dishonest strategy for dealing with a fiscal crisis that anyone in the House will be able to recall. It compares very unfavourably with the stance of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), who as Chancellor in 1995 and 1996 insisted on pursuing the policies that were right for Britain's long-term economic health, not those that would deliver short-term illusions of success, however tempting that may have been electorally.
	Britain's fiscal history over the past decade and a half is pretty simple. My right hon. and learned Friend created the golden legacy of low inflation, stable growth and falling unemployment, a legacy that the current Prime Minister inherited in 1997. He exploited that legacy to create a formidable image as a "prudent" Chancellor even while he was pumping up the bubble that was the root cause of the fiscal crisis that we now face. However, when the legacy ran out, he carried on spending, focused as always resolutely on the short term, spending the proceeds of his unsustainable bubble and then borrowing some more-spending and borrowing his way through the illusion of a boom. Apparently, that is his idea of building an economy that is best placed to withstand the slow-down and ready to lead the world out of the recession.

Paul Farrelly: The reality is that the so-called golden legacy was an accidental consequence of sterling's ejection from the European monetary system in the early 1990s after a previous unsustainable bubble. The hon. Gentleman wants to deal with facts and figures. What estimate has he made, given that the Conservatives want to cut faster, of the effect of that on domestic demand and therefore on the recovery of our economy?

Philip Hammond: We come to the crux of the disagreement between us and the Government. If there were no factors other than the level of demand implied by fiscal stimulus, the hon. Gentleman would have a point, but the fact is that what has kept Britain going through this recession and what will see Britain grow in the recovery are continued low interest rates and relatively loose monetary policy. We do not have an automatic option of maintaining a fiscal deficit at the level that the Government would like to maintain and still being able to keep monetary policy as loose as it is now. That is the crux of the disagreement between us. In my view, there are many members of the Government who understand that perfectly well, but the Prime Minister has chosen, for electoral reasons, to ignore those voices and to insist that he maintains his fiscal stance until after the general election.

Phil Wilson: The Government say that we will cut the deficit over four years. Under the Tory policy, how long would it take to cut the deficit in half?

Philip Hammond: I have indicated to the hon. Gentleman that we would expect to start the process of cutting the deficit, or of reducing Government spending, in 2010-11. This Government are proposing to go on increasing Government spending. The cumulative impact of starting early, even in a modest way, is quite significant. Of course, Labour Members want to try to reduce this to a very simple issue. It is a complex balancing act. I totally accept that. Reducing the deficit is going to have to go on over many years until we get ourselves back into balance. It can go a little bit faster if the economy is growing more strongly. It needs to be mindful of the monetary policy position that the Bank of England is able to offer at any given time. It needs to be mindful of wider macro-economic circumstances.

Andrew Pelling: Will the hon. Gentleman give way?

Philip Hammond: I will in a minute. I must make a bit of progress and then I will give way to a few more Members.

Michael Meacher: Will the hon. Gentleman give way?

Philip Hammond: I want to make a bit of progress and then I will happily give way again in a few moments. The Chief Secretary has wrong-footed me by being so surprisingly brief and I do not want to spend all my time taking interventions.
	We have ended up where we are today: the only country in the G20 not yet out of recession-the Chancellor confirmed that on Tuesday-running the biggest deficit in the industrial world, unemployment at nearly 2.5 million and, as I said earlier, with the highest number of young people out of work on record. We are in the longest and deepest recession in our history, with more companies going bust in this downturn than in any other. After 13 years of Labour Government, the poorest are getting poorer.
	Most importantly, confidence in the Government's economic management, both at home and abroad, already shaky, has crumbled since the PBR. It is no exaggeration to say that it is only the prospect of a change of Government that has prevented an even more marked negative reaction in market sentiments since the PBR.  [Interruption.] The right hon. Member for Holborn and St. Pancras (Frank Dobson) finds that amusing. I know that he is a great expert on financial markets.
	Mark Schofield of Citigroup, for example, said:
	"Unless we get a credible set of measures put in place quickly, which seems unlikely unless we get a Conservative government with a clear majority at the next election, we think the UK's Aaa rating will be right up on the radar screens in a very short space of time."

Frank Dobson: rose-

Philip Hammond: I will give way in a moment.
	This is how the Institute for Fiscal Studies summed up the situation:
	"Arguably, with the Conservatives well ahead in the opinion polls, financial markets may be more influenced now by whether the Opposition's policies are consistent with long-term fiscal sustainability than those of the government."

Frank Dobson: The hon. Gentleman quoted someone from Citigroup as a person we should take seriously. Would the hon. Gentleman care to tell us how much Citigroup lost in the banking crisis? Was it $10 billion, $20 billion or $30 billion?

Philip Hammond: The right hon. Gentleman makes his point. Mark Schofield and Michael Saunders, whom I shall quote later, are respected economists in the City. Their comments are widely circulated and noted.

Andrew Pelling: Will the hon. Gentleman give way?

Philip Hammond: I will not at the moment.
	The pre-Budget report was, as I said, the Government's last chance to turn this situation around and to restore Britain's reputation and credit-worthiness. It needed to do two things: first, to put in place a credible plan to restore fiscal balance, and secondly to demonstrate the political courage to implement it, instead of merely talking about it. The Government failed on both tests. The plan that the Chancellor set out has reassured no one. It was immediately attacked by business leaders, economists, market analysts and commentators. Richard Lambert, director general of the CBI, said on 9 December:
	"The Chancellor has made a serious mistake imposing an extra jobs tax at a time when the economic recovery will still be fragile...He has also missed the opportunity to increase the UK's credibility by reducing the public deficit earlier."
	David Frost, of the British Chambers of Commerce, said that the national insurance rise is
	"Terrible news...It's an additional cost for business when they can least afford it."
	The PBR was slammed by economists for being driven by politics, not by economics, with widespread agreement that the failure to produce a credible plan to tackle the deficit leaves Britain vulnerable to higher interest rates and a downgrade of the sovereign debt rating, which I assume is something that the Government will be concerned about.
	The right hon. Member for Holborn and St. Pancras will be pleased to hear that I am going to quote Michael Saunders at Citigroup, who is one of the City's most respected economists:
	"The PBR appears to be aimed at reviving Labour's core support rather than seriously tackling the UK's medium-term fiscal problems...These measures do little or nothing to alter the medium- and longer-term fiscal outlook."
	Let me give the right hon. Gentleman a few more examples. Barclays said:
	"The PBR is unlikely to dispel concerns about the UK's public finances...The government has demonstrated that it is willing to raise taxes to fund extra spending, but not that it is willing to project a more aggressive overall tightening in policy".
	Nor were analysts impressed by the Chancellor's forecasts, upon which even his modest plans for fiscal consolidation depend. BNP Paribas said:
	"The Chancellor's new forecasts also continue to look massively over-optimistic".
	Morgan Stanley said that
	"the Treasury's forecasts for GDP growth, particularly beyond the next couple of years, still look optimistic to us."
	Citigroup, again, said:
	"The revenue forecasts...look over-optimistic."
	RBS said that the Treasury has been consistently too optimistic on how much tax revenue
	"a given amount of GDP growth generates".
	All this leaves us exposed to higher interest rates, of course. Citigroup has said:
	"We suspect that as this budget is digested, gilts and sterling will react badly."
	RBS said:
	"Issuance remains at historically highly elevated levels and this is seen forcing yields higher in a post QE environment."
	The soaring national debt threatens a credit rating downgrade.

Frank Dobson: Will the hon. Gentleman give way?

Philip Hammond: I will give way to the right hon. Gentleman shortly, after I have finished reading out these reactions and responses to the PBR.
	On the afternoon of the PBR, Barclays said that
	"the UK's triple-A sovereign credit rating and the currency are likely to remain vulnerable."
	BNP Paribas said:
	"Given that the Government has decided to ignore the opportunity to take steps to remove the risk of a sovereign rating down grade we expect sterling to remain under pressure over the medium term."
	The bond-rating agency, Moody's, said that the PBR plans
	"stretch to the limit...what is consistent with a top rating."

Several hon. Members: rose -

Philip Hammond: I shall give way first to the hon. Member for Taunton (Mr. Browne).

Jeremy Browne: The Government's deficit reduction plan relies on increased taxation, reduced public spending and, crucially and perhaps least discussed, very optimistic forecasts for economic growth, well above trend forecasts. Does the hon. Gentleman accept the Government's forecasts for economic growth in the years ahead, which are part of the plan the Chief Secretary has outlined this afternoon?

Philip Hammond: It is clear from what I have just said that the qualified commentators' view is that the Government's forecast of trend economic growth beyond 2011 appears optimistic.

Liam Byrne: rose-

Philip Hammond: I know what the Chief Secretary wants to say now; he wants to talk about the Bank of England. The forecast appears optimistic, however. We are not an economic forecasting organisation, but we do look at the consensus of forecasts made by independent commentators, and I think it is fair to say that the Government's forecasts are at the top of the optimistic end of the spectrum.

Frank Dobson: rose-

Andrew Pelling: rose-

Michael Meacher: rose-

Philip Hammond: I shall give way first to the right hon. Member for Holborn and St. Pancras (Frank Dobson).

Frank Dobson: I said-ironically, of course-that I was most impressed by these qualified commentators, and, as usual, I was not exaggerating. Citibank, which provides one of the highly qualified commentators quoted by the hon. Gentleman, lost £60 billion, and it bought up Merrill Lynch, which had lost £52 billion, so this brilliant person is working for an organisation that lost £110 billion. The hon. Gentleman quoted Morgan Stanley, which lost almost £16 billion. Barclays losses were, admittedly, a mere bagatelle in comparison; it lost only £7.9 billion. We are expected to give credence to the prognostications of these idiots, however, including Moody's, which had given triple A ratings to all the lunatic procedures those organisations were following.

Philip Hammond: Clearly, there is nothing like a financial crisis to bring the old dinosaurs out of their caves-and I know the right hon. Gentleman takes great pride in being a dinosaur. I say this to him, however: I do not think anyone cares tuppence whether he gives credence to what these City economists are saying. The important point, however, is that the people who will have to lend us the hundreds of billions of pounds that this Government want to borrow do take notice of them, and they make their judgments about where to lend, and where not to lend, on the basis of them.

Several hon. Members: rose -

Philip Hammond: I shall give way to the Chief Secretary.

Liam Byrne: The hon. Gentleman is enormously kind in giving way. Does he acknowledge that Standard & Poors has said:
	"We believe that the ratings on the UK continue to be supported by its wealthy, diversified economy"?
	He will also recognise that Fitch said "The UK's triple A rating remains supported by its high value added, diversified economy." He will recognise, too, that Moody's has said that "the outlook for the UK Government is stable. Her Majesty's Government is deemed a resilient triple A issuer." The hon. Gentleman's presentation would be incomplete without such an acknowledgement. Would it not be incomplete, too, without an acknowledgement of the Governor of the Bank of England's growth forecast for 2010-11 of 4.1 per cent., which is much higher than the rate the Chancellor offered?

Philip Hammond: I predicted the last bit of that intervention, and I am happy to agree with the first bit: I am extremely kind. It is the bit in the middle that we have to talk about. If I really thought that it was done and dusted and that the UK's triple A credit rating was a lost cause, I probably would not be applying for the job I am applying for. I also hope, however, that the right hon. Gentleman similarly agrees that there is no scope at all for complacency about the triple A credit rating. That credit rating has not even been in question for decades, yet it is now right on the radar screen; it is being talked about in analysts' notes, and we need to be extremely careful. I understand that the right hon. Gentleman is under great pressure from the Prime Minister to create political dividing lines and to focus on the very short term, but he and his boss need to be extremely careful about how they present themselves to the people who decide these things, who ultimately will be the arbiters of our fate.

Nicholas Winterton: We need balance in this debate. We have heard a great deal from the Government, but will my hon. Friend describe to the House the scenario that would arise if the United Kingdom lost its triple A credit rating? It is important to know about the consequences that would flow from losing that rating-the implications of that on taxes and everything else that affects the country and the people of this country.

Philip Hammond: If my hon. Friend will wait a moment, I shall come on to a part of my speech that deals specifically with that issue. If he wants to intervene on me again then, I will be very happy to give way.

Brooks Newmark: In the plethora of quotes my hon. Friend gave us from the outside experts, one of the key points to consider-which is very much in tune with the wishes of the hon. Member for Luton, North (Kelvin Hopkins) and even the Government-is the need to stop the huge rise in unemployment. Does it not strike my hon. Friend as counter-intuitive to raise national insurance when one is trying to increase employment and reduce unemployment?

Philip Hammond: It is very clear that the increase in national insurance tax will have a negative impact on the capacity of the economy to create jobs, and I would have thought that creating jobs in the recovery would be one of the principal focuses of attention for the Chief Secretary and his colleagues.

Michael Meacher: Several minutes ago, the hon. Gentleman said that it was a mainstream view that there should be a reduction in the deficit through large and early public expenditure cuts, and he rather condescendingly rejected the opinions of those who took a different view. How does he explain the case of Japan in the 1990s? It followed exactly that policy. When recovery started, it raised the sales tax and reduced expenditure, and it went into a double-dip recession. How does he also explain that Roosevelt through the new deal expanded the economy, and as it began to come out of the slump, as a result of increasing taxes and reducing public expenditure, it went into a further slump that did not end until the war? Is the hon. Gentleman not pursuing exactly those wrong policies?

Philip Hammond: The right hon. Gentleman has, in fact, very neatly made my point for me, because in both cases the problem was an increase in interest rates too early in the cycle, which then choked off the recovery. What I have been arguing and what the Conservatives have been consistently arguing is that the most important determinant of the strength of the recovery will be the level of interest rates and the looseness of monetary policy.
	Whatever Labour Members might think, it is clear to Conservative Members that the credibility and creditworthiness of Britain requires a plan to deliver what the Governor of the Bank of England has called
	"a really significant reduction in the deficit...over the lifetime of a Parliament",
	which is the period for which a Government are elected. Surely the point is that common sense tells us that for as long as the Chancellor is publicly failing to propose something that meets the minimum requirements set out publicly by the Governor of the Bank of England, markets will be unsettled and they will mark the Government down. Demonstrating political commitment to fiscal consolidation means starting work on the task, not talking about it; it means putting one's money where one's mouth is.

Derek Twigg: rose-

Philip Hammond: I am going to make a bit of progress before I give way.
	At the time of the pre-Budget report, the Chancellor told us:
	"For as long as extraordinary uncertainties remain in the world economy, this is not a time for a spending review."-[ Official Report, 9 December 2009; Vol. 502, c. 368.]
	However, to be credible the pre-Budget report needed to be accompanied by a comprehensive spending review or at least by a clear allocation of departmental spending totals for 2011-12 and 2012-13. Having told us that he could not provide that, he went on to tell us that he was guaranteeing most of the NHS budget, the schools budget and the police budget.
	The Chief Secretary to the Treasury has recently refined this argument, with the proposition that the Government can confidently predict that we will come out of recession at the turn of the year and that economic growth will be 1.25 per cent. in 2010 and 3.5 per cent. in 2011 and every year thereafter, and can set an overall envelope of public spending in specific budgets for health, for schools and for the police-that is about 40 per cent. of resource departmental expenditure limits-but cannot allocate spending totals to the remaining Departments because they do not know what the level of unemployment will be.
	Yesterday, the Labour-dominated Treasury Committee said the following about that astonishingly selective forecasting capability:
	"It may be difficult for any current consolidation plan to command universal support. It will therefore be very important to add greater detail and clarity to the plan sooner rather than later."
	It went on to say:
	"There is a sense that the Treasury are using uncertainty to suit themselves"-
	by producing some forecasts as far as 2017-18 but no spending details beyond 2011. The Committee Chairman, the right hon. Member for West Dunbartonshire (John McFall), from whom we will hear later, added his thoughts in the covering press release, saying:
	"We consider clarity, even if it is clarity about the degree of uncertainty surrounding the forecasts, as essential to strengthening this crucial credibility."
	In addition, the Committee stated that it could
	"see no good reason for the Treasury failing to produce"-
	more detailed-
	"illustrative figures for future expenditure".
	We are being asked to accept that the Treasury can forecast growth, set spending totals and allocate funding to Departments that will grow, but that there are compelling and overriding reasons why the Government cannot allocate funding to the Departments that will shrink-and shrink they certainly will. It has been widely reported that there is an internal Treasury analysis showing that those Departments not fortunate enough to enjoy the political patronage of the Prime Minister will face a 17 per cent. real-terms spending cut over three years. That would confirm the analysis of the Institute for Fiscal Studies suggesting a 16 per cent. cut-or 19 per cent. if the ring-fencing is extended for a third year.
	That contrasts sharply with the Chancellor's words on the "Today" programme on 10 December, when he said:
	"Spending is going to be pretty much flat...Broadly speaking...we're assuming for the non-protected services it's going to be pretty much flat".
	That was in nominal terms, but even after allowing for inflation, it is a long way from a 17 per cent. real-terms cut. He was asked on Monday to deny the existence of that Treasury paper setting out the reality of 17 per cent. cuts in all other Departments, and I asked the Chief Secretary twice on Tuesday to deny the existence of that internal paper, but neither of them could do so. Instead, they got their civil servants to engage in producing costings of a bunch of fantasy policies, which Labour party officials then worked into a dodgy dossier-that fell apart even more quickly than the pre-Budget report did.
	So let me ask the Chief Secretary now-I will happily give way to him-whether the Government are going to address the biggest gap in their credibility by publishing a comprehensive spending review or departmental spending allocations for 2011-12 and 2012-13 before the general election. Will the electorate be told how the Government plan to deliver the fiscal consolidation that they have set out in aggregate in this pre-Budget report and that they claim is the proof of their commitment to restoring fiscal discipline? Or will we have to guess?

Liam Byrne: Let me deal with the hon. Gentleman's second point first. I have set out clearly in my presentation to the House this afternoon how we see £82 billion of deficit reduction taking place. Some £25 billion will come from growth measures and £57 billion from discretionary measures-tax will account for £19 billion of that and the rest will have to come from cuts and efficiencies in public spending. As he will recall from 1998, when comprehensive spending reviews were introduced, the whole point of them is about certainty; they are designed to give public service leaders and managers certainty about budgets for a period of three years. If a £4 billion or £5 billion margin of error remained because one cannot be clear about how fast unemployment will fall, that would be bigger than the budgets of four or five different Departments. If one cannot provide certainty about how much money is available, that defeats the object. We are happy to provide certainty, where that is possible. We know that the Conservative party is more than happy to provide four or five different positions on departmental budgets over the course of a day, but that is not an example that we wish to emulate.

Philip Hammond: So, as I said, we are expected to believe that it is possible to be absolutely precise about the protected budgets but not about the budgets that will be sacrificed. In addition, I did not hear the Chief Secretary answer the question about the paper on 17 per cent. cuts. That is important because in terms of defence, a 17 per cent. cut is equivalent to more than the entire pay and pensions bill for all the armed forces or a staggering 150 new Chinook helicopters every year. In terms of transport, it represents the entire budget for London and the south-east: for trains, roads, bus subsidies and the tube. For the Ministry of Justice, a cut of 17 per cent. of the budget is the equivalent of 50,000 prison places-that is 60 per cent. of the UK's total gone. No wonder the Chancellor thinks that this is not a time for a spending review. The Chief Secretary may not like my examples, but if he will not spell out the consequences of his plans, it will fall to us to do so. The Government want the political gain of setting budgets in certain Departments without taking the political pain of recognising the consequences of that ring-fencing for other Departments. That is dishonest and disreputable, and it will ultimately backfire on them.

Derek Twigg: I regularly hear the right hon. Member for Witney (Mr. Cameron) saying to the press that he is being open and honest with the British people. In that context and spirit, can the hon. Gentleman tell us by what date he will want the deficit halved?

Philip Hammond: We have made this point emphatically and repeatedly: we will make an earlier start than the Government have proposed to do and we will go further than they have proposed to do within the course of the next Parliament, as the Governor of the Bank of England has suggested. Exactly how far and how fast we go must, of course, depend on the economic circumstances and on the context of the monetary policy with which we find ourselves dealing.

Derek Twigg: With respect, the hon. Gentleman has just talked about clarity, openness and honesty, so, given that we have already said what we are going to do, when will the Conservatives have halved the deficit. What is his plan? Does he have no plan for the date by which it will be halved?

Philip Hammond: What matters at the moment is what is going to happen immediately. We have made it very clear that we will start in 2010-11 to reduce public spending. The current Government have made it clear that they will continue to increase public spending in the face of all the evidence that they are taking unacceptable risks with the UK's credit rating, creditworthiness and reputation in the markets by doing so.

Several hon. Members: rose -

Philip Hammond: I have to make a little progress or there will not be any time left for the rest of the debate.
	If the Chancellor was in any doubt about the market reaction after the pre-Budget report and the immediate reactions to it, he should be in absolutely no doubt now. The UK 10-year gilt spread against the German bund, which is the benchmark, has widened alarmingly since the pre-Budget report. In less than a month, there has been an 18 per cent. rise in the spread-up to 62 basis points-and a rise of one third of a per cent. in the cost of servicing our national debt. The Government now need to find £5 billion more in spending cuts to balance the books than they did on the day that the Chancellor stood up to deliver his pre-Budget report.
	At the end of 2008, the cost of insuring UK gilts against default was twice as expensive as the cost of insuring McDonald's corporate debt. At the time, a Government spokesman said that there was "obviously something odd" going on in the credit default swap market. Perhaps it was not so obvious-a year later, credit default swaps on 10-year Government bonds still trade at a 70 per cent. premium compared with those on 10-year McDonald's bonds.
	Nearly half the economists polled by the  Financial Times in a new year study cited the fiscal crisis as a key threat to the economy. We have already heard about the statement from PIMCO. Not only does it expect a credit rating downgrade, which it says is more than 80 per cent. likely, but it has announced that it will reduce its holding of UK Government bonds during the coming year. There might be all sorts of reasons why PIMCO has chosen to reduce its holding of UK Government bonds, but even the Chief Secretary would have to concede that it is not particularly helpful at a time when a country needs to issue £200 billion of new bonds over the course of a year to have the world's biggest holder of Government bonds saying that it intends to reduce its holding of that Government's paper.

Jeremy Browne: rose-

Andrew Pelling: rose-

Philip Hammond: I shall give way one more time, then I must finish.

Jeremy Browne: I am grateful to the hon. Gentleman for giving way. Will he clarify a point in his position that I do not understand? The Government say that they wish to halve the structural deficit by 2014. He says that he will have to take account of factors along the way. For example, growth might not be as strong as the Government anticipate, or there could be another recession-I hope that there is not, but there could be. There might be other unforeseen circumstances. Perhaps we will have additional military commitments, for example. Given that his position is that we must be flexible-I think that he is sensible to have that position-will he concede that it is possible that the Conservative party, were it to win the general election, would fail to reduce the structural deficit by half by 2014? In other words, the Conservatives might reduce it more slowly than the Government plan to reduce it.

Philip Hammond: I would not presume to give the hon. Gentleman a lesson in economics, but it seems to me that the possibility of growth's being slower or faster will not affect the evolution of the structural deficit, although it might affect the cyclical deficit. The difference between us is that we have consistently talked about targets for reducing the structural deficit, which is what the Governor of the Bank of England has suggested, whereas the Government talk about the total deficit, not differentiating between the structural and cyclical deficits.
	I have talked a great deal about markets and some hon. Members are inclined, I think, to take a view of "Markets be damned." However, when one needs to borrow £200 billion over the course of the coming year, one needs to listen to what the markets are saying. When borrowing capacity depends on one's credit rating-

Andrew Pelling: Will the hon. Gentleman give way?

Philip Hammond: I am going to have to do so eventually, so I shall do it now.

Andrew Pelling: As the hon. Gentleman is surely going to be in charge of these issues in May, how will he approach the issue of the triple A rating? What will he be willing to sacrifice in the Budget to defend the triple A rating? Does he think that there are some things that he will definitely want to keep, even if the rating were to be downgraded to double A plus or double A1?

Philip Hammond: I am grateful to the hon. Gentleman for his vote of confidence. Of course, sending a signal to the markets that restores confidence is a delicate business. We are in a party political debate, but I think that everyone understands that it is very difficult for a Government, at this point in the cycle with the opinion polls where they are and with the Prime Minister insisting on his ridiculous dividing lines, to send reassuring signals to the market. The trick-the task for an incoming new Government-will be to reassure the markets sufficiently to finance the debt and keep interest rates low and to do the absolute minimum that is necessary to maintain interest rates at that level. That is a constant balancing act, which requires constant trimming and tacking.

Paul Farrelly: Will the hon. Gentleman give way one final time?

Philip Hammond: No, I shall definitely make some progress.
	I have talked about the markets, and it is important to say-this answers the point made by my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) earlier-that although market confidence matters for Governments, it also matters for our public services. We must not lose sight of that point. Next year, we will spend £44 billion on interest payments on the national debt. By 2013, that figure will have risen to £63.7 billion if interest rates stay as they are. But interest rates on British Government debt have already started to rise. By 2013, for every extra 1 per cent. of interest cost that we face, another £14 billion of public spending cuts will be needed to finance it. We are already spending more than the schools budget on debt interest, and by 2013 we will be spending double that budget on debt interest. Britain plc has a huge vested interest in maintaining low interest rates and in maintaining the credit rating to support them.
	This all matters to ordinary people, too-to home owners, families and businesses. Many people who faced this recession fearing that they would lose their homes and their jobs have been bailed out by the Bank of England's prompt action in reducing short-term interest rates to the lowest possible level and pumping liquidity into the economy. It is low interest rates that have kept Britain going through this recession, not the Chancellor's much-vaunted fiscal stimulus.

Sally Keeble: Will the hon. Gentleman give way?

Philip Hammond: I shall in a moment, because the hon. Lady has not intervened before. However, let me make a bit more progress.
	Low interest rates must sustain the economic recovery, allowing businesses to invest and to create jobs and allowing home owners to refinance mortgages at affordable costs. Anyone whose interest in the economy is focused on a horizon that stretches further than the next five months can see the huge risks that the Government are taking with Britain's future.

Sally Keeble: The hon. Gentleman has been very fond of quoting the Treasury Committee's report. Will he acknowledge that the report attributes in substantial part the fact that unemployment is lower than one would otherwise have expected and that repossession rates have been lower than would normally have been expected precisely to the Government's intervention?

Philip Hammond: No. That is absolutely wrong-

Sally Keeble: That is what the report said.

Philip Hammond: The facts are right, but that has happened precisely because of the intervention that has been made by the Monetary Policy Committee of the Bank of England in lowering interest rates very rapidly to unprecedentedly low levels and in keeping them there. I look forward to hearing what the Chairman of the Select Committee has to say on that in due course.

Paul Farrelly: I fully understand the hon. Gentleman's point on interest rates, and he will appreciate that point because the Conservatives have made major mistakes on interest rates-during the 1990s, for example. Does he accept that his answers to interventions from Members from all parties have been rather simplistic and old-fashioned in reflecting the monetarist versus Keynesian arguments of the past? I am sure that a respected former economist from Shell might have something to say on that very shortly.
	Does the hon. Gentleman accept that the implication of what he says is that any fiscal stimulus or any measures that the Government have taken to help the economy are not only not worth while but counter-productive, and that the Conservatives would therefore not have undertaken them? Is that his position? Is it also his position that they will protect health and overseas aid-that they will have their cake and eat it-without spelling out what departmental cuts they will make under a Conservative Government?

Philip Hammond: The hon. Gentleman will recall that it was the leader of my party who first told the public that cuts would be required-six months before the Prime Minister was finally dragged kicking and screaming to that admission. It was our party that first started to spell out specific cuts that would have to be made-

Paul Farrelly: indicated dissent.

Philip Hammond: For the hon. Gentleman to shake his head is simply disingenuous.
	On the big test of the PBR-that is, the restoration of economic and fiscal credibility-it was a resounding failure. Markets were dismayed, the deputy Prime Minister was incandescent and it was not much of a crowd pleaser either. I shall spare the House the list of quotations from various newspapers on the day following the PBR. It is astonishing that the Chancellor not only failed to begin the process of cutting spending but announced a further increase in public spending and financed it by slapping an extra tax on everybody who earns more than £20,000 a year by raising employee national insurance contributions. They will now go up by a total of 1 per cent., costing someone on £30,000 an extra £200 a year and someone on average earnings an extra £60 a year.
	There is a similar burden on employers at a time when we are trying to create jobs. The Institute for Fiscal Studies has made the obvious point that employee and employer NICs are the same tax. Both are incidental on wages, so anyone who earns £14,000 or more a year will be hit by Labour's double tax whammy on employer and employee NICs. The Prime Minister is determined to fight the coming election on a class war battlefield, but it seems rather strange to start by feeding the Chancellor's spending addiction with a tax that impacts on the millions of decent, hard-working people in this country who earn £14,000, £15,000 or £20,000 a year. If we win the general election, our No. 1 priority will be to try to avoid Labour's new national insurance tax increases on the many.

Justine Greening: On that point, does my hon. Friend agree that many of the couple of hundred thousand-no doubt, young-people who are now unable to get part-time employment will be students who use part-time employment to fund themselves through university? Does he agree that the worst hit will be low-income students who have to do such work because it is the only way that they can afford to get their degree?

Philip Hammond: I am sure that my hon. Friend is absolutely right. She has identified just one of the many groups who will be hit by this Labour tax on the many.
	There were a couple of other noteworthy points in the PBR. A Labour PBR would not be complete without some spectacularly unjustified rhetorical flourish and some sleight of hand that comes out only when we analyse the small print-and we did, indeed, get both. Some hon. Members, perhaps on both sides of the House, have not recovered from their mirth at the Chancellor's assertion that he was taking these decisions from a position of strength. There was a sleight of hand: an unannounced reduction in the NHS budget, which was caused by the £446 million that the Treasury will claw back from the national insurance tax hike. That means that Britain's biggest employer faces a real-terms budget cut rather than the maintenance in real terms that the Chancellor announced.
	There was also a shockingly cynical pre-election bribe. We have got used to some of those. The Chancellor said in his pre-Budget report speech that there would be above-inflation increases for benefits, including disability living allowance and child benefit, but it later transpired, when the IFS started crunching numbers, that the Government's published plans include a 1.5 per cent. real-terms cut in benefits in 2011. The Prime Minister could not bring himself to be any more honest about that cut than he has been about others. The following day, he was reported on Sky News to have denied the charge by claiming:
	"Benefits will continue to go up".
	If the Chief Secretary wants to put the record straight and confirm that benefits will continue to go up in 2011, I would be happy to take an intervention from him. Some of my hon. Friends might remember the council tax rebate for pensioners in the Budget of 2005, which was, surprisingly, discontinued in the Budget of 2006.

Stephen Timms: I am grateful to the hon. Gentleman for giving way, and I look forward to responding to his points at more length later. On the benefit increases that he has just mentioned, what has happened is that increases have been brought forward. There will be no reduction subsequently. That is quite wrong.

Philip Hammond: I see. So, increases have been brought forward. That means that benefits will go up this year and go down again next year, so that is not a reduction. I will remember that for the future.
	This pre-Budget report is the dying gasp of a weak, divided and incompetent Government. [Hon. Members: "Here we go."] Yes, here we do go. This is a Government led by a Prime Minister who has betrayed the office he holds by blocking the tough action to deal with the deficit that the Treasury has advised is necessary. He is placing the prosperity of millions of British people in jeopardy for the sake of his wretched dividing lines, and he is gambling on their jobs to try to save his own. There will be £789 billion-worth of extra borrowing over the next six years, doubling the national debt again to nearly £1.5 trillion. There is no credible plan for dealing with the deficit, no honesty on spending and certainly no spending review. There will be a higher deficit in 2013-14, as a percentage of gross domestic product, than when Denis Healey went to the International Monetary Fund.
	As Labour is too weak to take the action necessary to tackle the deficit, it has had to admit in the PBR that a Labour victory in the general election would mean, as has already been announced, an extra £7.8 billion-worth of taxes, which is £370 per family. The vast majority of that money will come from the national insurance tax increase, which will affect everyone who earns more than £14,000. It would also mean a further £30 billion-worth of tax increases, which are shown in the figures but unexplained. That is another £925 per family being hidden from view until after the election.
	Despite the Government's best efforts at obfuscation, this PBR has made crystal clear the reward that the people of Britain would get if they were to re-elect this Government: higher taxes and higher interest rates. The PBR is an admission of surrender; it is the capitulation of new Labour. Labour is abandoning any pretence of being serious about restoring the public finances to health and getting Britain back on the road to prosperity. It is abandoning all those who are working, striving and saving for a better future for themselves and their children. It is retreating to its core support and turning its back on aspiration. It is failing the country in its hour of economic need. If the Prime Minister does not have the courage or the competence to deliver the change that Britain needs, let him at least do the decent thing and call an election at the earliest opportunity and let somebody else try to undo the damage that this wretched Government are doing to Britain's credibility and creditworthiness, before it is too late.

John McFall: I strongly welcome the Government's decision to accept the Treasury Committee's recommendation to hold a full day's debate on the pre-Budget report. That is an important step in parliamentary scrutiny of public finances. In that respect, I thank the staff of the Treasury Committee. We took evidence from the Chancellor, his officials and experts in the last week before the Christmas recess, and work was done to write the report during the Christmas recess. The report was agreed only on Tuesday and printed on Wednesday. I thank both the staff and my colleagues on the Committee for that.
	The main issue that we considered was the macro-economy, which is best described by the word "uncertainty". Uncertainty is certainly present in the economy, whether in bank lending, the future path of unemployment or even GDP growth. We noticed that that is causing some businesses to delay making important decisions that could benefit the economy, such as investing and hiring staff. Mention has been made of the scepticism among some economists about the 2011-12 growth forecast, given the considerable degree of uncertainty. It is therefore critical that the Treasury should provide more quantitative information on the risks in relation to its forecasts, especially on economic output.
	As has been mentioned, there has been some good news. Unemployment has been substantially lower than was expected for such a severe recession, and there have been fewer repossessions than expected. Business insolvencies are also far lower than would have been expected in previous recessions, and the recent manufacturing statistics show promise. Much of that is due to the Government's policy of supporting households and businesses through the recession with fiscal measures. It is obvious that the fiscal input has worked in such cases; without them, the recession would most certainly have become a depression.
	However, we must be vigilant about a further weakening in the labour market. As we feared, young people in particular have been hit by the recession. In November, youth unemployment in the UK reached a record high of 943,000, or 19.8 per cent. So, I welcome the Government's measures to support youth employment, but I urge them to do more to ensure that young people who are unemployed have the opportunity to get into the labour market, because statistics show that if young people are unemployed for a considerable time, their life chances are impaired as a result.
	House prices have also settled, but at a historically high loan-to-income ratio that may be unsustainable, especially if monetary policy eventually tightens. The concern over repossessions means that the Government must remove support in this area very carefully. The Committee urges them to report in this year's Budget on the housing market's sensitivity to future fluctuations in employment and interests rates.
	As we have known for quite a long time, bank lending, sadly, remains uncertain. As a Committee, we do not want a return to easy credit, but neither do we want the economy to be crippled by a lack of access to credit. That is particularly important for those businesses that still cite the lack of finance as their most pressing problem. I still receive communications on a regular basis from businesses telling me about their difficulties with the banks in that respect. There is a danger, therefore, that bank lending may not support recovery in the private sector, and the Treasury has assured the Committee that it will remain vigilant in this regard.
	The Government have put in place measures to improve businesses' access to finance, and that is commendable. However, I would like future measures to be aimed at encouraging non-bank sources of finance for businesses, and especially for small and medium-sized ones, so that they are not so dependent on the banking sector in the future.
	Adam Posen, a recent member of the Monetary Policy Committee, appeared before the Treasury Committee and said that the UK lacked a spare tyre for when the banking sector goes into crisis-a lack that means that any future recovery will be threatened. Posen compared the UK to Japan, saying:
	"The closer one looks, the more worrisome this specific parallel becomes",
	due to the concentration of banking in a few large firms, and the comparative lack of non-bank sources of finance for companies. The UK's banking structure, he said,
	"could impede the return of trend growth in the UK to its previous rate, and...could if things worsen put on persistent deflationary pressure",
	as the ongoing banking structural problems did in Japan.
	Economies with up-to-date banking systems, or which have alternatives to bank lending, are the ones that recover faster and stronger. The need to reform our banking system is hugely important. We cannot continue with just five or six big companies: that spare tyre is needed, and it is needed urgently.
	Going forward, we need to rebalance the economy away from consumption. Before the crisis, there was a steady decline in the household saving ratio, from over 14 per cent. in 1981 to zero in 2007. The recent bounce in the saving ratio up to 8.6 per cent. must be maintained if we are to have a strong economic recovery. Increasing household saving may not be achieved through macro-economic policy alone. I believe that we will need to widen access to savings products, and introduce new products appropriate for groups who were not targeted before.
	The Treasury Committee has welcomed a number of Government measures in this area, such as the Saving Gateway, and I hope that further measures will be brought forward. I well remember the report that we published in 2004-05 on restoring confidence in long-term savings, in which we said that savings was a middle-class industry. A lot of people do not have access to savings and are not being encouraged to save, and that is an issue for the Government to take up.
	On the public finances, there is a fine judgment to be made over fiscal consolidation, especially given the macro-economic uncertainty. The Committee said that withdrawing fiscal support too early could plunge the country back into recession, with dire consequences for growth and employment that would cost the Exchequer more in the long run.
	The Governor of the Bank of England told the Committee that we needed to act "at the right time" but, as we all know, there is no consensus on what the right time for fiscal consolidation is. The Committee pored over that very question, but more clarity will be required to achieve that consensus.

Sally Keeble: Does my right hon. Friend recall that, when the Committee considered the scale and speed of fiscal consolidation, all the experts from whom we took evidence agreed that faster or deeper fiscal tightening would hit support for pensioners? Would that not be the unacceptable price of tighter spending cuts?

John McFall: I do recall that being mentioned, but I also recall that youth unemployment was mentioned as well. Like the pensioners, that is a really big issue for us.
	The Treasury Committee also felt that the PBR did not provide enough information on how the structural deficit will be reduced. Because of that, we believe that the Government must bring forward a clearer and detailed plan. As has been mentioned, that should happen sooner rather than later, and this issue certainly needs to be tackled after the next election. We also feel that the Treasury could provide more quantitative information on the public finances. As the shadow Chief Secretary to the Treasury has said,
	"there is a sense that the Treasury are using uncertainty to suit themselves."
	The PBR gives some forecasts to as far ahead as 2015, and illustrative projections to as far ahead as 2018, despite any worries about uncertainty. It could therefore be considered arbitrary that the Treasury fails to produce projections of future expenditure, or at least of the split between departmental expenditure limits and annually managed expenditure.
	The Treasury must also provide more quantitative information on the risks around its forecasts for the public finances, given the degree of uncertainty surrounding them. We realise that the Fiscal Responsibility Bill will tie the Government into a fixed time scale for managing the deficit. The fact that that will require close parliamentary monitoring makes transparency all the more important.
	The Committee notes the risk, however small, of another uncovered gilt auction and yields rising. Quantitative easing is slowing, and there will still be large gilt auctions in 2010-11. However, we also note the methods now employed by the Government to reduce the risk of uncovered auctions, and welcome the fact that there have been no further uncovered auctions since our Budget 2009 report.
	The Treasury Committee report, like many earlier reports, also mentions child poverty. As a Committee, we remain convinced of the continued importance of the commitment to eradicating child poverty, despite the difficult economic circumstances.
	Given the recent slow-down in progress on the child poverty targets, and the likelihood that this year's target will be missed, it is vital that the Government set out a credible plan to tackle child poverty, going forward. It is vital that the Government set out the steps that they propose to take to achieve the 2010 target, and to achieve the elimination of child poverty by 2020-a very bold but also a very proud manifesto commitment in 1997.
	I turn now to the question of the bank payroll tax. The Treasury Committee has been at the forefront in calling for change in the culture of banking, but estimates suggest that the Treasury now expects to receive about £3 billion or £4 billion from the tax when it originally expected only £500 million. That shows that the banking culture has not changed-that banks have simply gone ahead and paid out the bonuses. That is hugely important, because there is public anger about this matter. People are not fooled, and they realise the extent of the bank bail-out. I made that point yesterday to the Economy, Energy and Tourism Committee of the Scottish Parliament, when I was giving evidence to its inquiry. It is important that we remind ourselves of that.
	The Treasury purchased £37 billion of shares in RBS and the Lloyds Banking Group; it gave indemnity to the Bank of England for £200 billion of quantitative easing; it has also agreed to guarantee up to £250 billion of wholesale borrowing by banks; it provided about £40 billion of loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme; and it insured banks' assets to the tune of £280 billion. The National Audit Office, in a recent report, suggested that the net cash outlay for the purchase of shares in banks and the lending to Northern Rock will be about £117 billion, with a gross outlay of £131 billion. As a result, the Government's commitment to banks is 60 per cent. of GDP, and the value of that is 83 billion working days. The consequences for the UK are stark, but so are the consequences for the world. The International Monetary Fund says that 10 per cent. of global GDP will be lost for ever as a result of the banking crisis.
	The banking crisis, which prompted the financial crisis, is at best halfway over. The IMF estimates the total non-performing assets in the world to be worth $3.4 trillion, of which only $1.7 trillion has been written down. So a second bank bail-out will not be tolerated in the United Kingdom or in other European countries. I have visited Germany, Austria and Belgium in the past few weeks, and I got that message. It will also not be tolerated in the United States, which I visited, too. Now is the time to fix the banking system, and I think that we have four to five years to change the financial architecture. That is why the Treasury Committee announced a few weeks ago that it would be undertaking an exercise on the "too big to fail" issue, which seemed to be brushed under the carpet last March, but has since been revived.

Adam Afriyie: The right hon. Gentleman is making a powerful point about the action that would need to be taken either to reduce the size of banks or to ensure that they were not too big to fail. Why does he think that, despite his Committee's report last year, his many comments and his input over the past year, the Government have not taken any action to deal with the issue that he highlights?

John McFall: The Government have taken some action, but the issue is complex nationally and internationally. We see that from the tax on bank bonuses, whereby we have had a kick-back from the City, because some companies have said that they want to relocate. However, there is an international dimension, too. Given that we exist in a globalised world, we need to fix the matter globally, and that is a very difficult job. Like the Treasury Committee, others have taken to the stage and commented for a considerable period.
	For example, the Governor of the Bank of England, who has appeared before our Committee, has been explicit on the issue. When we visited America, we met Paul Volcker, a former chairman of the Federal Reserve, who said that there was an issue that needed to be tackled. Indeed, he went further than any of us by saying that he wanted sound evidence from the banking sector that any financial innovation in the past 20 years had led to economic growth. The only financial innovation for which he gives the banking system credit is the ATM. There is deep scepticism.
	Nicholas Brady, a former US Treasury Secretary under Ronald Reagan, had an article in the  Financial Times this week, in which he said explicitly that the "banking system is unsound." Core reforms are essential if we are to provide the system with safety and soundness. People want safe deposits. One of the hardest questions that I asked the bank chief executives when they appeared before the Committee was, "Do you agree with the 'Oxford English Dictionary' definition of a bank, which is an institution for the safe keeping of people's money? If you do, you have screwed up." That is the issue: the consumer wants trust and confidence in the banking system to be restored.

Adam Afriyie: My point was, given everything that the right hon. Gentleman says, which people widely recognise, the Government are responsible for ensuring that the banking system works better than he describes. My question was simply: why have the Government not taken action in that area over the past 12 or 13 years?

John McFall: I am saying that the Government have taken some action in that area. I am sure that the hon. Gentleman, who sits on the Conservative Benches, believes in markets and free markets, but does he want Governments interfering in every single decision? I do not think that he does, so philosophically he will have to come to terms with the issue.
	It has been proved that there is now no such thing as a free market, particularly in the banking sector. The Governor of the Bank of England came before the Committee and made this very point. It is a one-way bet for the banking system: if people do well, they get big rewards; if they do badly, they get big rewards. The Government need to go further on the issue of incentives in the banking system, because the incentive structure has distorted the long-term health of the banking institutions. People have had short-term returns but long-term instability. That is why we have joined all these eminent people such as Mervyn King, Paul Volcker and Nicholas Brady; no doubt I will add the hon. Member for Windsor (Adam Afriyie) to that list next time I speak on this issue.

Edward Leigh: The truth is that nothing would militate more against recovery than for the Government to try to interfere in the banking system. However incompetent banks have been, that would be nothing to the levels of gross incompetence that would accrue were Governments to get involved in banking.

John McFall: The hon. Gentleman should take his colleague, the hon. Member for Windsor, for a quiet tutorial and make that point to him. The banking community has been absent from this debate; people have put their heads under the radar. If they do not want inappropriate legislation and heavy regulation, they will have to engage in this issue and ensure that we get a system that works-that we go back to a market system that operates in the interests of everyone in society. If the hon. Member for Gainsborough (Mr. Leigh) can join me in calling for that, I will be very pleased for him to do so.
	Volatility and instability are at the core of the financial system at the moment. That is why the Treasury Committee has set up this inquiry. We are not saying that we should go back to the United States Banking Act of 1933 in its purest form; we are asking how we can make the system more stable and less volatile, and ensure that trust and confidence in the system is restored and that banks act in their own interests and those of their shareholders, the public, their customers, and society as a whole.
	One aspect that has been missing from this debate is the public-the debate has been between the City and the political community. That is why, along with my colleagues, the right hon. Member for Haltemprice and Howden (David Davis) and the hon. Member for Twickenham (Dr. Cable), we have established the Future of Banking Commission, which has been supported by Which? and eminent economists such as Roger Bootle, John Kay and others. That is intended to give the public a voice so that their interests are looked after and safeguarded and we end up with an appropriate banking system that serves the interests of society-nothing less than that. Only by ensuring that that happens will we restore the trust and confidence in the system that we all desire.

Vincent Cable: We have had two debates on the economy this week. I judged, wrongly, that this would be the centre of attention, but the Chancellor and the shadow Chancellor clearly took a different view. Nevertheless, I persist in my belief that this is an important debate, for several reasons. First, it centres on the pre-Budget report, which was a very important event, however we judge it. As the Chairman of the Treasury Committee pointed out, the debate represents an advance, albeit a small one, in parliamentary accountability, because it represents an acceptance that the PBR should be subject to debate. Moreover, we now have access to the Treasury Committee's review of the PBR, which we did not have on Tuesday. There is therefore a lot to discuss today that we were unable to discuss properly then.
	I want to say something about the deficit and the controversies surrounding it; something about the issue that dominated the PBR but has now largely been forgotten-the banking tax, and what has happened to it; and something about the long term, because we are very preoccupied with the short-term fiscal position. There was an interesting half one-liner in the PBR about the creation of an infrastructure bank and a vision of how the economy could develop in the very long term, and we need to refocus some of our attention on long-term structural issues.
	I start with the deficit. This debate has been a good deal less emotional than bits of the one that I heard on Tuesday, in which the right hon. Member for Birkenhead (Mr. Field) among others proclaimed that the fiscal crisis was comparable to the crisis in 1940. Other speeches were at a similar level of emotion. Today everybody has been a little bit calmer, but we clearly have a serious problem and it is helpful to start by stating what the deficit problem is.
	There are two linked problems: a deficit or borrowing problem and a debt problem-a cash-flow problem and a balance sheet problem. The problem of debt and the balance sheet is clearly serious, because the situation is deteriorating rapidly. However, as is often pointed out from various parts of the House, as things stand the level of British public debt in relation to the economy is actually one of the lowest in the developed world and much lower than at various periods historically.

William Cash: Will the hon. Gentleman give way?

Vincent Cable: Perhaps I can anticipate the hon. Gentleman's intervention. I know he believes that there is a measurement problem, and that if we measured public debt differently, we would come up with much higher figures. I am merely citing the international conventions of the OECD and the International Monetary Fund; he might have something to add.

William Cash: The figures on which I rely are from the Office for National Statistics, and indeed the researchers in the House of Commons Library have confirmed them. They illustrate the point that I, my right hon. Friend the Member for Wokingham (Mr. Redwood) and my hon. Friend the Member for Braintree (Mr. Newmark) have made that the figure is not £850 billion, as is suggested. The true figure, which I believe is now endorsed by our Front Benchers-it certainly appears to be-is nearer £3 trillion, and maybe more. If the measurement is out by a factor of three or four, does the hon. Gentleman not agree that that underlines all the difficulties about what the deficit is and what the definition of net debt should be?

Vincent Cable: I am sure it does but, equally, other developed countries have the same problem of incorporating public sector pensions. However, I accept the hon. Gentleman's broad point that there is clearly a problem. A more acute one is the borrowing problem. Some 13 to 14 per cent. of GDP is currently being borrowed, and it is being done in a very artificial way because the Government are buying up their own debt in the current strange monetary circumstances. The level of borrowing is unprecedented, I believe, and it is the highest in the developed world except possibly the United States, which is in the rather different position of being able to borrow in its own currency. There is a serious cash-flow problem, which we must take seriously and which is at the heart of the debate.
	Two policy issues come out of that problem, both of which have been touched on. There is the historical problem of how we got into this situation and who is to blame, and the forward-looking problem of what we do next and how we manage what we all accept to be a difficult balance. The hon. Member for Runnymede and Weybridge (Mr. Hammond) summarised in numbers how we got here and why we have our public financing problem. Roughly a quarter of the problem is accounted for by the cycle, the ups and downs of the economy and the recession, and three quarters is structural. The problem is that the word "structural" is bandied around, but it is never terribly clear what people actually mean when they use it.
	I know that the Conservative argument has always been that the structural problem is the "hole in the roof" showing the neglect of the budget over many years. That argument is partly true, but the problem with it is that the hole in the roof was actually quite small. I have been doing this job for five or six years now, and I remember debating the matter with the predecessors of the hon. Member for Runnymede and Weybridge, the right hon. Member for West Dorset (Mr. Letwin) and the former Member for Arundel and South Downs, who had an unfortunate slip-up at the last general election. When we talked about the structural deficit then, we were talking about roughly 1 per cent. of GDP. Now we are talking about something rather different-an over-dependence of the economy on the banking sector and to some extent on the ups and downs of the housing market as a source of revenue. It is quite right that we now talk about how to adjust the level of public spending down to one that relates to stable sources of revenue. That is what we mean by the structural debate.
	In the wider context, it is a little disappointing that although we are talking about that very real problem, which we have to face, there is little discussion of how we can make the British economy much less dependent on banking in the long term. The Chairman of the Treasury Committee touched on this, but it is a fact that in the British economy, the balance sheets of the banks together account for about four times gross domestic product, which is about four times as large as in France or Germany, and much more than in the United States. We cannot sustain that position and it must be changed. Equally, our economy has become highly over-dependent on people's belief that property prices rise and rise, which we also need to address. That is the real structural debate, but we are not having it.
	On the background and the history, it is certainly true that the bulk of the problem we are now dealing with is structural rather than to do with the cycle of recession. It is almost unique to Britain and it is not shared by the US and other countries. That takes us to what we do next and how we manage the situation. I was struck that in the more temperate passages of the speeches from the Government and Conservative Front Benchers, there was an acknowledgement that that is a very tricky balancing act.
	It is certainly true that unless action is taken quickly, or at least unless action is seen to be taken quickly, there is a real risk of a sovereign debt crisis, with all the consequences that that brings-higher interest rates and the downgrading of credit worthiness, which is a real issue, not just a hypothetical one. On the other hand, we must balance that against the fact that precipitant action before private consumption and private investment get going risks aggravating and prolonging the recession, which in turn would make the public financing problem even worse. Getting that balance right is incredibly difficult, and nobody should pretend that there is any simple dogma that gives the correct solution.
	The Government and Conservative Front Benchers quoted economists on various sides of the argument. The hon. Member for Runnymede and Weybridge cited the  Financial Times survey of 80 economists that was taken over the new year period. The result was rather predictable: they were roughly divided 50:50 on what we do about the problem. Some were predictably in the half who argued that we should just get on with the job and start slashing the deficit-it included Professor Patrick Minford and Ruth Lea, and Philip Booth of the Institute of Economic Affairs, who have an ideological dislike of the public sector. However, it is fair to say that that half also included sensible, balanced people, of no obvious ideological inclination, who believe, for perfectly good economic reasons, that we must get on with the job.
	The other half, who were equally reputable, interesting and varied, said, "Actually, we have got to be very careful, and it would be rather foolish to embark on big cuts in public spending before 2011." It is worth while going through some of the names in that half: David Blanchflower and Sushil Wadhwani, former members of the Monetary Policy Committee; Julian Le Grand of the London School of Economics; George Magnus of the UBS bank; Sir Samuel Brittan; John Philpott of the Chartered Institute of Personnel and Development; Andrew Hilton of the Centre for the Study of Financial Innovation; and Peter Spencer of the Ernst and Young ITEM Club. I have no idea of the politics of many of those people, but they are all arguing on good economic grounds that it would be dangerous to embark too rapidly on slashing public spending. The argument is therefore finely balanced.
	It is worth looking at what Ian McCafferty, the chief economist of the CBI, who is taken very seriously, says. He has probably got the balance about right. He said:
	"Whoever wins the next general election, fiscal consolidation is unlikely to start much before 2011. The exact starting point is less important than the credibility of the medium term plan, which requires...a clear direction of travel and sufficient detail on quite how the headline borrowing targets will be achieved."
	That summarises what the central issue is and takes us to the Treasury Committee report.

Liam Byrne: The hon. Gentleman is making an excellent speech, but I think it would be useful at this point in the debate, since we have heard from Government and official Opposition Front Benchers on this subject, to ask him whether in his judgment the reduction in the deficit in the first year of the Government's plan should be faster, or whether the Government have broadly judged it right?

Vincent Cable: I do not think we should rush into rapid cuts. One of my areas of disagreement with the hon. Member for Runnymede and Weybridge is that I do not think there is a strong case for that. It is a difficult issue and there is a balance to be struck, but rushing into expenditure cuts in 2010-11 would carry a greater risk of precipitating deeper recession. My party takes the view that the Government's eight-year plan, with a four-year halving of the deficit, is a reasonable starting point. My judgment is that we will probably discover that it is not enough, but we have to start somewhere, and it is a reasonable working assumption.

Stewart Hosie: I agree that precipitate cuts would be foolish and weaken the ability of the economy to recover. What does the hon. Gentleman make of the Government's already announced £800 million cut to the Scottish budget, which will start in the spring of 2010? Those cuts are already under way. Does he think they should be overturned or some other course of action taken?

Vincent Cable: I do not think that Scotland is fundamentally different from the rest of the UK. We all face the same problem and we are all experiencing the beginning of cuts. For example, I am meeting the Minister for Science and Innovation in a few days' time about the impact of cuts in that sphere. We cannot have an indiscriminate approach to public spending reduction, and my argument is not that the cuts should not happen, in Scotland or anywhere else, but that they have to be much more carefully thought through and targeted. That is the approach that I would adopt.
	The Select Committee's report, although expressed guardedly as it represents a cross-party consensus, contains some serious implied criticisms of the pre-Budget report, which take two forms. The first is the acknowledgement that the Government have been nowhere near detailed enough in spelling out how they will approach future cuts in spending. The key conclusion reads:
	"However we note that although the Treasury believe the Pre-Budget Report contains sufficient detail about the way in which the structural deficit would be reduced, our expert witnesses all criticised the document for not providing enough information about how this will be achieved."
	The Committee does not say that it agrees with the expert witnesses, but that is implied.
	The second criticism is of excessive optimism about economic growth in the future. The report states:
	"There is, however, considerable scepticism among economists around the Government's growth forecasts for 2011-12."
	That is a hedged-around comment, but its drift is clear. The criticisms have been made and need to be taken seriously. I would add the additional, and most serious, criticism that the Government have mobilised to raise taxes-£113.5 billion over four years-but instead of using that money to consolidate the budget, as they will surely have to do as they themselves acknowledge, they have committed it to additional spending. That is surely wrong and has sent all the wrong signals.

Liam Byrne: The hon. Gentleman will accept that a judgment has been made about the right level of deficit in the next financial year when the economy will still be growing at a rate below trend. In the subsequent year, there will be a sharp fiscal tightening, but that will be at a time when the economy will be growing at above trend. There is an element of judgment involved, and the Government have made a decision about the right level of deficit commensurate with the forecast level of growth in the economy.

Vincent Cable: I am sure that that is right: the extent and timing of the fiscal contraction have to reflect the state of the economy. I have suggested five tests that might be used to ensure that, one of which is-obviously-the rate of growth. Another is the growth of unemployment. Another one has to be the state of the borrowing markets.
	I hope that the Government are right about the expectations of economic growth. I hope for rapid economic growth because hundreds of thousands of people's jobs hinge on it, but one has to be realistic: an awful lot of factors are holding back growth, and are likely still to be doing so in a year. Private consumers are unlikely to embark on another spending splurge when they are heavily in debt. We have an underlying problem that British consumer debt in relation to the economy is the largest in the developed world, and certainly the largest in our history for a very long period. It would be surprising-and probably unwise, in many cases-were people to rush out and start spending.
	Private sector business investment is unlikely to take off rapidly. There is an enormous amount of spare capacity, but as the Chairman of the Treasury Committee just reminded us, there is a severe credit squeeze. That will be even more the case once we enter a period of expansion, because the banks are over-reacting to the crisis and not lending to sound British companies. We will not get any growth from public spending, whether consumption or investment. The entire expectation of economic growth rests on exports, but actually they are a relatively small part of the British economy. It will require a near miracle to achieve the kind of growth for which the Government, and indeed all of us, hope. Frankly, we have to be realistic about that.
	I want to comment on two other aspects of the PBR that have not today received the attention they probably should have done. One is the Government's tax on bank bonuses, which was put together in a hurry. Given that it is a fairly short-term tax, I hope that, in the conclusion to the debate, the Chief Secretary or his colleague, having had a month's reflection, can summarise what, in their judgment, has been the impact of the tax. Furthermore, how are they meeting some of the criticisms that have been thrown at the tax, of which there have been several? The first was advanced from the Liberal Democrat Benches. We were very sceptical about the ability of the tax to capture bank bonuses because of the numerous opportunities for potential avoidance, through multiple payments of bonuses, payments in salary and payments in kind, and it would be useful to have an assessment of how far the Government think they have plugged those various potential holes.
	Secondly, the Government themselves argued that the main purpose of the tax was to change the behaviour of the banks, to discourage them from paying out bonuses and to encourage them to build up their capital reserves. Are the Government in a position to estimate how much capital reserves will be changed-improved, from the Government's standpoint-as a result of the measure? It was all done in a hurry and we did not get much analysis at the time. Can the Government now tell us what they think?
	Thirdly, we are being told by the banks themselves, rightly or wrongly, that they are all now stumping up the money, that they are paying it and that the Government will receive a lot more than £500 million. What is the current estimate of the amount of money that will be raised? Finally, over the holiday period, we heard many rumours and much speculation about banks running off to Switzerland and other places because they object to paying this high tax and other things. I suspect that much of that is rhetoric and an attempt to blackmail the Government.

Edward Leigh: While we are on the subject of high salaries, does the hon. Gentleman agree that the public sector must set an example? There is understandable public anger about the fact that 50 people who work for Transport for London earn more than the Prime Minister and that 50 people who work for the BBC earn more than the Prime Minister. Would he support any proposal that would limit salaries in the public sector to what the Prime Minister earns?

Vincent Cable: Indeed, I think I was the first person to advocate that, and I am certainly willing to go along with other people who say the same thing. Our view on the public sector pay freeze that came in was that it should perhaps have been more progressive and there should have been a fixed cash award for everybody, rather than a percentage increase. However, I take the point that the public sector has to show similar discipline.

Andrew Pelling: When considering the performance of the banks, is it also important to focus on how the additional liquidity provided by the authorities can be used most effectively? There are issues and dangers of a return to the high-risk culture that drove the banks before in terms of performance. I understand that the Department for Business, Innovation and Skills has summoned many senior bankers to discuss that very issue.

Vincent Cable: Yes, although I think the hon. Gentleman is making several different points. The short-term intervention in the form of the bank tax must not obscure the much bigger issue of how bank bonuses will be regulated in future in such a way that banks do not take excessive risks. That is the important long-term question. However, I would like to ask a final question about the bank tax. In view of what appears to be its rather greater success in raising revenue than some of us predicted, do the Government now intend the tax to be a permanent feature or, as was implied at the time, does it merely cover the period up to the end of March this financial year?
	My final point relates to a small detail in the PBR, but none the less an important one in the long term, which is the concept of an infrastructure bank. We must not constantly be sucked into negative thinking about cuts in the short run, overlooking the problem of how we create a more viable and balanced economy in the longer term. Several serious people-not just in the engineering industry, but in the insurance industry-have surfaced in the past few weeks to indicate that this area represents both a big challenge and a big opportunity. The chief executive of Legal and General, for example, has pointed out that he has hundreds of billions of pounds sitting in his institution in annuity funds, much of which is currently going into buying American corporate bonds. He has asked, "Why can't I put this money into British infrastructure?", to build railways, barrages or other forms of useful infrastructure on a commercial basis, albeit with some Government pump-priming.
	Although the Government's proposal is modest-there is a suggestion of a co-ordinating body in the Treasury-I wonder whether the Financial Secretary could set out in his conclusion to this debate how they envisage what seems to me a constructive and sensible idea evolving in future years. What scale of operation are we thinking about? What might the Government's role be financially? The insurance companies are not asking for guarantees; they are asking for Government equity in any funding. How can that be done on a sufficiently large scale to make a difference and help to create a more balanced economy?

William Cash: In the light of the disaster that we have just experienced on the economic front with the banks, just as we did in the 1850s, does the hon. Gentleman not agree that his line of reasoning perhaps leads to the idea of companies similar to the water, gas, electricity and even railway companies of the 19th century, which were supported by debenture stock, so that the elements of loan that he has mentioned are in place, but focused on companies that are not exclusively under Government control?

Vincent Cable: That is exactly the idea being promoted. The problem that we start from is that it is not now possible to envisage making large-scale investments in British infrastructure. The banks will not do it, because they are de-leveraging, and the stock markets will not do it, because of their short-term perspective in most cases, while private equity companies are worried about over-borrowing. The only mechanisms are likely to be what we now think of as new ideas, but which have a precedent in the 19th century, as the hon. Gentleman said. It would be interesting to see how far that idea can be pursued.
	With that, I would like to listen to the remainder of the debate.

Frank Dobson: Once again, the Tory party appears to be in full swing in its campaign to convince the people of this country that the only function of Government after the forthcoming general election will be to cut public investment to reduce the current deficit. Needless to say, the Tories have been backed up in that by their friends in the news media and their friends in the finance industry, whose bail-out caused most of the problems in the first place. The deficit needs to be reduced. However, it should not be allowed to take priority over the continuing duties of Government to ensure that the people of this country have jobs and homes, schools and hospitals, pensions and policing, and transport and other local services at home, and peace and security abroad. However, this debate is substantially about the deficit, so I shall concentrate on that.
	There were three main causes of the present financial crisis. The first was the need to find the money to bail out and prop up the banking system. I would remind the hon. Member for Runnymede and Weybridge (Mr. Hammond) that most of those people whom he has described as wise and wonderful and able to prognosticate the future would not have a job if the taxpayer had not bailed out their businesses and propped them up to prevent them from collapsing.

Philip Hammond: Just for clarification, may I remind the right hon. Gentleman that not one penny of the deficit projected for the coming year will be used for direct financing support for the banks? The money that the Government have put into the banks is of course cash, but it does not form part of the revenue deficit that the Government face.

Frank Dobson: I do not think that we needed that explanation, and I did actually understand it.
	The second cause of the crisis was the cost of the measures to counter the recession that the banking crisis has brought about. The third was the loss of tax income that resulted from the recession, which was caused by the bankers. So it all goes back to the bankers. This is all the inevitable result of the worldwide banking crisis, and it is no use the Tories and their friends, or the bankers and their apologists, trying to blame this Government in general or the Prime Minister in particular. It is also true to say that, at almost every stage in this crisis, those on the Tory Front Bench have opposed the crucial measures that the Government have taken to save the banking industry from catastrophe, to protect jobs, homes and businesses from a deeper recession, and to get recovery under way. The Tories have opposed them all. It might be the duty of the Opposition to oppose, but surely there are limits. A bit of common sense would not go amiss now and again.
	The recession caused by the bankers has led to unemployment, repossessions and business failures, but those outcomes have been nothing like as bad as the City analysts whom the Tories keep quoting were predicting. One reason for that is that, unlike the hysterical analysts in the City, most people running businesses live in the real world and are level-headed. They are trying to keep their firms and their work forces together so that they will still be in business when demand for their goods and services rises again. Their efforts have been backed up by the Government's determination to keep pumping money into the economy to make up for the damage caused by the bankers. This included bringing forward investment projects, the public purchasing of goods and services from the private sector, and the quantitative easing that has poured money into the economy. It also included the temporary reduction in VAT, which was derided by those on the Tory Front Bench and their analyst friends when the Government introduced it, although it is now acknowledged as having been a considerable help.
	We all have to recognise, however, that the effects of the recession are far from over. The recovery is under way, but it is quite fragile. Yet this is the moment that the Tories are choosing to demand massive, immediate cuts in Government spending. They claim that this would reduce the Government's deficit, but it would not, because it would involve more people being thrown out of work. Throwing people out of work does not reduce the deficit. Quite the reverse: throwing people out of work increases it. Every job lost is a triple whammy for the taxpayer. First, the taxpayer has to go without the goods and services that the job-losers used to produce. Secondly, the taxpayer has to fund the benefits needed to keep the jobless and their families. Thirdly, the taxpayer has to do without the tax that the job-losers would have paid if they were still in work.

Jeremy Browne: Will the right hon. Gentleman give way?

Frank Dobson: No, I must get on.
	Even without counting the reduction in economic activity, keeping someone out of work costs at least £12,000 in benefits paid out and tax not taken in. That is £12,000 per person that is added to the deficit. To put it another way, throwing someone out of work is like turning a useful member of a ship's crew into a passenger who then has to be looked after by the remainder of the crew.

Philip Hammond: The right hon. Gentleman is rightly concerned about the prospects for employment. Given that concern, does he support the Government's proposal for a 2 per cent. increase in national insurance contributions, and what does he think that that will do to the job market?

Frank Dobson: It will not help the job market- [Interruption.] Unlike the Tory Front-Bench team, I am not living in a world of fantasy. It will not help the job market, but it is a better proposition than what we have heard from the Tories. There should be no question, in my opinion, of making cuts in public investment until the economy is well on the way to recovery and the joblessness rate is way down from what it is now.
	Apart from the cost of bailing out the bungling bankers, the main cost of the recession is the result of the reduction in economic activity. We are not producing all the goods and services that we are capable of producing. The economy is not fully operational and the best way to clear the deficit is to get the economy working at full capacity again. The only way to do that at this stage is to keep on pumping public money into the system until the private sector recovers.
	No doubt prompted by the recent disclosure of the official papers covering the first days of the Thatcher Government, the Tories, their media friends, the bankers and auditors and the infamously incompetent ratings agencies and their friends have started saying, "Well, yes, Mrs. Thatcher's policies may have been tough, but they worked. She transformed the economy." This myth-and it is a myth-is sadly subscribed to even by many people who should know better. The fact is-and it is a fact-that the average annual economic growth under the Wilson-Callaghan Governments who preceded Mrs. Thatcher was higher than the growth in the Thatcher years, so revered by the Tories and their City analysts.
	The Thatcher Government succeeded in creating a feel-good factor by spending the massive tax takings from North sea oil and gas and the huge capital receipts from the privatisation of electricity, gas, telecommunications and other industries. These one-off assets were squandered: they were not put into a sovereign wealth fund; they were not used for long-term investment in the country's future in new manufacturing industry, in science, in research or in education; and the money was certainly not invested in training, as apprenticeships were abolished. The Tory Government used it to fund tax cuts with massive tax benefits going mostly to the rich, which appears to be the Tory policy still. Contrary to free market economic theory, the Thatcher Government did not increase economic growth; they actually reduced it.

Karen Buck: rose-

Frank Dobson: I give way to my hon. Friend and neighbour.

Karen Buck: On that same point, does my right hon. Friend agree with me that during those years and as a consequence of the particular employment policies he outlined, the number of children living in poverty increased threefold? The Institute for Fiscal Studies has calculated that if the policies in place in 1997 when the Tory Government were last in office had continued until the present day, 2.1 million more children would be living in poverty than are now and that as a result of the Government's policies, including those in the pre-Budget report last week, a million children will have been lifted out of poverty by the time of the election.

Frank Dobson: I agree with my hon. Friend's point.
	When the Tories went into that general election 30 years ago, of course, they had an election manifesto. Needless to say, they did not keep to it. I have been reading it and it should be filed under fiction. The fact is that they did not keep their promises. They promised to honour the pensions system they inherited, yet practically the first thing they did was to cut the link between pensions and earnings. They promised, and I quote,
	"a competitive and efficient coal industry",
	yet they closed it down. They promised to simplify the tax system and came up with the poll tax. They promised to make better use of training resources; they closed down the Training Agency and abolished apprenticeships.
	The Tories promised, and again I quote, "to master inflation"; under them, inflation ripped to record levels. In one Thatcher year, inflation hit 18 per cent. while over her whole period as Prime Minister, it averaged 7.6 per cent. a year and never fell below 3.4 per cent. They promised to make better use of NHS resources, yet they gave tax breaks for private medical insurance and left the NHS with decrepit hospitals and staff shortages. That is only a sample of what happened in response to the Tories' famous manifesto.

Sally Keeble: History lessons are sometimes very useful. When expert witnesses appeared before the Select Committee, they said that in the event of a faster fiscal tightening, what would certainly have to go would be our proposal to bring back the index-linking of pensions to earnings.

Frank Dobson: Again, one of my hon. Friends has made a valid and important point.
	That Tory manifesto was soft soap. The Tory reality was hard-faced. The Tories' real policies were not in their manifesto, but they were being advocated by think-tanks and pressure groups, and they were then put into practice when the Tories came to power. I believe that they are trying the same trick again. The Tory leadership present their party as reformed and rehabilitated, but it cannot be trusted. To find out what the Tories really intend, we need look no further than what the Tory think-tanks and supporters' groups are saying. That way, we find out what the real Tory policies are.
	The TaxPayers' Alliance-a real Tory outfit if ever there was one-and the Institute of Directors are jointly advocating all sorts of slashing attacks on services that make life decent for millions of our fellow citizens. They are threatening the elderly with a freeze on the basic state pension and the income guarantee, the withdrawal of free bus passes, and the abolition of free television licences. They are threatening children and young people and their parents with the abolition of Sure Start, the ending of the education maintenance allowance, the abolition of child benefit and the child trust fund, and the ending of the interest subsidy on student loans. They are even threatening a 25 per cent. cut in spending on the arts and theatre. Furthermore, they are threatening people in the impoverished third world with reductions in aid.

William Cash: Will the right hon. Gentleman give way?

Frank Dobson: As long as the hon. Gentleman promises not to mention Brussels.

William Cash: I give the right hon. Gentleman that guarantee. What I do want to ask him is this. I suspect that he is keeping his prescription to himself until the end, if indeed he is going to produce it at all, but he has said many times in the past that it would be far better if we resorted to a policy of nationalisation. Does he think that that would be the right thing to do in the light of the present crisis in our banking and economic circumstances?

Frank Dobson: As far as I can make out, even bankers are in favour of nationalisation provided that it nationalises them and saves their bacon. I am not fanatically in favour of it, although I accept the point made earlier by my hon. Friend the Member for Morley and Rothwell (Colin Challen)-who is no longer present-that it would probably be a good idea to keep the east coast main line in the public sector rather than handing it back to the collection of incompetents who were running it before.
	It is not just the TaxPayers' Alliance that is advocating cuts in services. Reform, which portrays itself as another influential Tory pressure group, advocates penalising pensioners for the banking crisis by abolishing the winter fuel allowance, free television licences and concessionary bus fares, and ending retirement pensions, council tax and housing benefit, widows' and war widows' pensions, carer's allowance and disability living allowance for people receiving considerably less than average pay. It is also urging the Tories to impose the same eligibility threshold for maternity pay and child benefit, and to scrap the employer-supported child care scheme, the health in pregnancy grant, the Healthy Start scheme, the Sure Start maternity grant and the education maintenance allowance.
	We should beware the Tories' claims to have changed. Their supporters and paymasters have not changed. The people who will be paying for their forthcoming advertising blitz have not changed. We should resist their attacks on pay and pensions. This crisis was not caused by the potential cost of pensions for postal workers or teachers. It has not come about because social workers or nurses or bank clerks are overpaid, or because refuse collectors or shop assistants or factory workers or people gritting roads today are not working hard enough. It has come about because the overpaid bankers and their auditors could not distinguish between an asset and a liability, and the famous rating agencies could not have spotted a wrong 'un even if they had been trying.
	I believe in accountability and responsibility. The banking industry and its hangers-on caused the crisis. They should have to meet the bulk of the cost of clearing it up. It is simple. It is the "polluter pays" principle. The bankers polluted the world economy. The bankers should have to pay for clearing up their pollution. Therefore, I welcome the new top rate of income tax and the bankers bonus tax. I support the proposal for a tax on all international financial transactions. I urge the Prime Minister to continue to press for a Tobin tax in collaboration with his French and German counterparts and, hopefully, shame the Americans into accepting it.
	The only way we can get out of this recession and create a fairer and more equal society is if the bankers meet their fair share of the costs that they have imposed on the rest of us. The bankers have shown no signs of reining back on their excessive rewards. If the self-rewarding excess of the bankers continues while everyone else has to tighten their belts, it will lead to bitterness and social unrest. As the bankers and their public relations machines deploy their wealth and influence to scapegoat others for the consequences of the banking crisis, we are already seeing a major campaign to lay the blame on hard-working people providing vital public services. Once that sort of irrationality takes hold, once scapegoating becomes acceptable, there is no knowing where it will end. It could set loose forces that set one part of the country against another, one generation against another. It could risk giving right-wing extremists such as the British National party a hell-sent opportunity to promote petty nationalism and the politics of race and religion.
	I believe deeply that our response to the recession that the bankers have created will not just determine the future of public finances. It will determine whether the second decade of the new millennium is faced by our people united in the pursuit of fairness and prosperity, or whether we are to be torn apart by strife that could threaten our very democracy.

Peter Lilley: It is always a pleasure to follow the right hon. Member for Holborn and St. Pancras (Frank Dobson), if only because it reminds us how far the rest of us have moved on over the past couple of decades. I hope that he will forgive me if I do not return to fight the old battles, which he enjoys fighting even though he lost. I see no need to re-fight them, because we won.
	I have found that I can begin almost any speech on any subject, and I do, by reminding people of the slogan that Bill Clinton used to have above his desk to remind him of what was really important: "It's the economy, stupid." As we are focused on the economy today, we need another sign above our desks saying, "It's the deficit, stupid" and below that perhaps another one saying "It's public expenditure, stupid." Unless we focus on getting a grip of public expenditure and on eradicating the deficit more rapidly than the Government want, we will not get the economy of this country right. The supreme weakness of the pre-Budget report-some of us may have forgotten that we are supposed to be debating that today-is that it does not focus on those things. One has to get more than halfway through the overview at the front before there is even the coyest of mentions of the deficit:
	"The Pre-Budget report announces action to maintain the path of fiscal consolidation".
	It goes on to say that the three measures that maintain the path of fiscal consolidation are all tax increases. That is how the Government see the priority of solving the deficit. The report refers to public expenditure only in the last sentence, when it mentions that the Government plan is to embed
	"in legislation through the Fiscal Responsibility Bill"
	their measures to halve the deficit. The substitute for action, as far as the Government are concerned, is the deficit-reduction Bill. We debated that at length on Tuesday. I did not have a chance to participate then, so I hope I will be forgiven for saying now why I consider that Bill to be a mistake.
	First, it is obnoxious in principle to try to bind future Parliaments. That cannot be done in practice by passing a law, but time and again this Government try to bind future Parliaments by passing legislation that has a bearing on what future Governments must and must not do. Secondly, the Bill is nonsense. It is not even legally enforceable. It is not even judiciable; it is one of those rare Bills that actually has a clause that effectively says that the courts may not take note of the law incorporated in it. It is imprudent, too, because it seeks to bind, albeit unenforceably, future Governments to follow a particular path when we cannot be sure what things will be like over the next four years-let alone the next eight or 10 years, as the Bill envisages. I think that we should probably pursue a fairly ambitious path, but it is foolish to try to lay down a law on what needs to be done in future. The Bill is also a displacement activity; it is a substitute for action because the Government want to avoid action and facing reality.
	What is most wrong with the Bill, however, is that it is a recipe for delay. St. Augustine said, "Make me chaste, O Lord, but not yet" and St. Alistair says, "Make me fiscally responsible, but not until 2011." At least St. Augustine saw himself ultimately becoming chaste, but the Chancellor and the Prime Minister are probably passing on the task of fiscal responsibility to their successors, rather than to themselves.
	I believe that it is better to act sooner rather than later, because there is a positive benefit in doing so. If we act sooner in taking steps to get the deficit under control, that will restore confidence; and with confidence, growth will come-and with growth, jobs will come, not least for our young people who are currently languishing on the dole queues at the very start of their careers.
	There is also danger in deferring action on the deficit in that every month we do so the risk increases of our having a sovereign debt crisis and a financial collapse. That would mean higher interest rates, which would not only make controlling the deficit less easy, but hit all those people with mortgages. One thing about this economic downturn is that at least there is a section of the community that is reasonably well off, and in some cases better off, because interest rates are low: the mortgage payers of this country. They face the greatest threat from this Government's refusal to tackle the deficit speedily and strongly, because it is their interest rates that will increase.

Justine Greening: Does my right hon. Friend agree that because other countries have already come out of recession, our taking a long time to get our public finances back into shape will be a double disadvantage-both domestically and globally in competition with other countries?

Peter Lilley: My hon. Friend is absolutely right. If we leave this too late and as a result there is a crisis, we will have to take much more brutal action: instead of companies simply not recruiting, they will have to sack people; instead of voluntary redundancies, there will be compulsory redundancies. That will be the inevitable consequence of taking too long over implementing the measures that we need to take to bring the deficit under control.
	The Chief Secretary said that worries about major holders of Government bonds selling their bonds were overstated. He said that PIMCO was selling bonds because it was looking for riskier assets elsewhere. He must be the only person who thinks that PIMCO and other bond holders are selling UK bonds because they think that they are not risky enough-because they think that the Government's finances are not putting us in sufficiently great danger of bankruptcy. The truth is that they are selling them because they think that the price does not yet fully reflect the risks and dangers of financial collapse. They know that if that happens there will be higher interest rates, and they would prefer to buy them back then rather than experience the collapse in the price and rising interest rates while still holding them.
	The Government argue that withdrawing the fiscal stimulus too soon will risk provoking a double-dip recession. That is wrong for several reasons. The first reason is that it is an argument for never taking action. If withdrawing the supposed stimulus has a negative impact, it will do so next year, the year after or the year after that; after all, it was several years after the recovery had begun that the double-dip recession occurred in the United States in the 1930s. That was not because action was taken in the first or second year of the recovery; the action was taken three or four years later, in 1937. Like a lot of the arguments that the Government put forward on many of their policies, it is an argument for not doing anything.
	The second reason is that the stimulus effect of a deficit is grossly exaggerated. This country has a bigger deficit than almost any other comparable country in the world, yet it is the last to come out of recession, so there has not been a vast stimulative effect. Likewise, its removal will not have a vastly depressive effect.
	The third reason is that the Government's argument ignores the fact that the effect on improving confidence of action to get the deficit under control far outweighs the impact of the loss of Government expenditure feeding into the economy if the fiscal contraction and consolidation take place sooner. The fourth reason is that we are dealing with a structural deficit, and the way to tackle that is to make structural changes, which takes time. If we do not start thinking them through and implementing them now, we will not get the benefits until it is too late.
	So, there are sound reasons in principle for disagreeing with the Government's view that there is a great danger in starting the process of fiscal consolidation at the first possible opportunity, and there is plenty of evidence in practice. We have seen Governments do this before. This country has previously started the process of fiscal contraction before the recovery has been long established. In 1976, the Labour Government did just that-they had to, because the International Monetary Fund told them to do so. At a recent seminar in the City, players in those past crises revealed that Jim Callaghan was quite keen to do it anyway and found what the IMF said to be a useful excuse. Lord Donoughue, the head of his policy unit at the time, said that having argued internally and with the IMF about whether they could avoid taking such action, they were struck by the fact that when they did so renewed growth in the economy came much more rapidly and strongly than they had anticipated and that the effect was positive, rather than negative.
	In 1981, the Conservative Government took such action. Some 364 economists wrote to  The Times saying that any attempt to reduce the deficit at the bottom of the recession would turn that recession into a continuous downward spiral from which there would be no hope of recovery. Almost from the day that their letter was delivered and published in  The Times , and, simultaneously, Geoffrey Howe-now Lord Howe-introduced his Budget, the economy started to recover. The effect on confidence outweighed the direct Keynesian effect.
	Plenty of evidence from overseas supports what I am saying. An excellent study that I have mentioned before in this House-I have still seen no evidence to suggest that the Government have yet read it-has been produced by the European Central Bank. Its occasional paper series No. 38 "Economic reactions to public finance consolidation: a survey of the literature" is very revealing. It reveals that on many occasions the effect of reducing Government spending, and even sometimes of raising taxes, in order to produce fiscal consolidation is positive. It states:
	"The issue attracted much renewed interest in the light of the experiences of fiscal consolidation in Denmark (1983-86) and Ireland (1987-89). In spite of the severe restrictive policies pursued in the two countries during the periods concerned, their rates of growth showed significant increases on previous years."
	There was also a study of some 18 OECD countries over the last 30 years of the previous century which showed a range of expansionary and contractionary episodes. The conclusion was:
	"The effect of fiscal policy therefore becomes non-Keynesian"-
	that is to say that a contraction of the deficit produces expansion of the economy-
	"when large and persistent budgetary adjustments are implemented."
	That is precisely the circumstance that we find ourselves in today. By contrast, another study mentioned in the document considered five rather similar OECD countries: Australia, Canada, Germany, the United Kingdom and the United States. It concluded that
	"the effects of fiscal policy on GDP and its components"
	have tended to
	"become substantially weaker over time"
	and that since 1980, the
	"effects have been mostly negative".
	In other words, a contraction in the deficit produces a sufficient return in confidence to produce expansion in the economy.
	So, we have the evidence to know that we ought to be taking action now. The sad truth is that we have a Government who are unable and unwilling to face up to reality, who are putting their party political interest before national interest, who are using tired economic dogma against actual experience that has been studied and seen to operate on the ground, and who make easy promises before the election, leaving tough choices until afterwards.

Stephen Timms: I am listening to the right hon. Gentleman's speech with interest. He presented the handling of the 1980s recession to us as a success. He will recall, as we all do, the fact that unemployment reached 3 million in that recession. Surely there are lessons to be learned and we should not be repeating that experience.

Peter Lilley: We should not. We started then from a very different situation, with massive over-manning in both the public and private sectors. Because of changes in the economy and in trade union law, that situation was seen to change. That happened in other countries that moved from a very socialised economy to a more liberal one, as a result of being too socialised and too syndicated in the first place-of having that mass over-manning. My point was that the contraction in the deficit produced an expansion in output of activity. That surely meant that there was less unemployment than there would otherwise have been, unless the Financial Secretary is saying that we should-well, I cannot see any alternative.

Sally Keeble: I want to underline the point made by my right hon. Friend the Financial Secretary. Does the right hon. Gentleman not accept that in the early 1980s and early 1990s the social unrest created by the fiscal consolidation sparked riots in most of our inner cities? One of the telling things about this recession is that although we have seen such a level of unemployment and repossessions, the country has held together-touch wood-remarkably well. There has been a sense that we are pulling together to get people through a real crisis.

Greg Hands: Better than the Government.

Peter Lilley: My hon. Friend on the Front Bench makes a valid point-the country might have been holding together, but the Government clearly are not. However, let me address directly the hon. Lady's serious and important point. I do not want to return to the previous speaker and to re-fight the battles of the '80s, but my point is that the Keynesians argued that that consolidation of the budget deficit would intensify the recession and they were proved wrong. That is the simple point that I want to put across. The economy, far from going into a deeper recession, began a strong and prolonged recovery. Perhaps the hon. Lady can think of other ways in which that recovery could have been made even greater and stronger, but she has not pointed out what they might be and nor has anybody else I know. I want to allow other people to take part in the debate, because I want to hear what they have to say.
	How do we cut expenditure? We want to cut expenditure in ways that do not throw people out of work and that do not undermine public services. We have to recognise that we have one of the most expensive public sectors in the EU. It is heading for, and is set to reach, more than half of our GDP. Moreover, one of the biggest impacts within the sector has been the increase in the pay budget. I draw the House's attention to a study produced just a few days ago by the Centre for Economics and Business Research, which gives all the facts and figures and says that if the public sector pay bill had risen in line with the private sector pay bill over the past two years, then taxes, or borrowing, could have been £11 billion lower. One of the main agents of the growth in the deficit has been the fact that the public sector pay bill has been out of control in the past couple of years. It must be brought back under control in the interests both of controlling the deficit and of reducing the impact on jobs in the public sector. We do not want to lose a single job if we can help it, if those jobs are valid or if people can be moved to do something more useful.
	We must learn to say no to new ideas-that probably applies as much to Opposition parties as to the Labour party-and we must not be in the business of adding to our spending commitments. We must also learn from the private sector the lessons of lean production and how constantly to improve the value for money that one gets from any given number of people. The way to do that is not through top-down statements that we are going to change it all through a few edicts from some great man, even though we can recruit some great experts in efficiency. Ultimately, it means doing in each Department what I started to do in my Department-the Department for Social Security-and asking people at the sharp end of the Department how they could do their job more efficiently.
	It was quite difficult to get my managers to do that. They came back and told me that they had spoken to the area managers. I said, "I didn't ask you to do that. I want you to speak to the people who actually fill in income support claims, or who help to monitor invalidity benefit claims, and ask them how they could do their job better." No one had asked those staff that before, and they came up with an enormous range of sensible ideas for improving efficiency. The target was to improve efficiency by 25 per cent.-in other words, to reduce the number of jobs by 25 per cent.-but they participated in the exercise because no one had ever asked them before how they could do their job more effectively. They knew that they were doing lots of things in very inefficient ways, and they wanted to do them better. Most people in the public sector want to do their job better and have the public interest at heart. We must do that at the micro level, through every Department, to harness the experience and expertise of the people at the sharp end of each Department.

William Cash: Will my right hon. Friend give way?

Peter Lilley: If my hon. Friend will forgive me, I am just drawing to a close.
	If we do that, we can make the process of fiscal consolidation less painful than it would otherwise be. However, no one should pretend that it is not going to be painful, and no one should forget who is to blame for getting us into this crisis.

Michael Meacher: What has been rather depressing about listening to the speeches of Opposition Members is how exclusively they seem to be concerned about the interests of the financial markets and how little concern they appear to have about the wider interests of the people of this country. All this is rather like a double-take of the Geoffrey Howe Budget of 1981, to which the right hon. Member for Hitchin and Harpenden (Mr. Lilley) has just referred. That Budget decimated the industrial economy and, as my right hon. Friend the Member for Holborn and St. Pancras (Frank Dobson) has said, produced a lower rate of growth over the relevant period than in the preceding period of the 1970s, which was extremely difficult because of hyper-inflation due to oil prices. It is rather tragic that minds seem to be closed to the idea that there are alternative ways of dealing with the deficit that will not be so socially destructive and that could be more effective in the long run. That is what I want to discuss.
	I shall focus on one crucial aspect of the pre-Budget report, which has had a little attention today but which has not been properly faced up to: the Treasury's assumptions about growth over next year and the year after. The Chancellor's view, as he expressed it, was that the worst is over. As we all know, the contraction of 4.75 percent. in 2009 is a post-war record and borrowing this year is on course to reach a peacetime record of 12 to 13 per cent. of GDP, yet the economy is forecast to rebound by 1 to 1.5 per cent. this year, rising to 3.5 per cent. in 2011-12. That would enable the Government to achieve their target of halving the deficit within four years, without the savagery of the full cuts that the Tories are clearly planning if they were to win the election. That projected growth is absolutely crucial to the PBR strategy but where is it going to come from? That is my question.
	It is true, of course, that there are some real signs of recovery. They include the unprecedentedly fast turnaround of financial markets, which some say has never happened so quickly in 300 years. The assumption is that somehow that will drag the real economy up behind it, but that remains to be seen. Other factors are the slowing in the increase in unemployment, which is very welcome, the lower rise in home repossessions than in previous downturns, and the greater support for youth employment brought about by the Government's present expenditure of £5 billion on job placements for 18 to 24-year olds and the increase in training and apprenticeships. However, my question remains: all that is important and useful, but will it add up to a huge surge in growth to 3.5 per cent. within two years?
	In the boom years before the crash in 2007, household consumption contributed 1.75 per cent. of growth each year, with business adding about another 0.25 per cent. for a total of 2 per cent. That, of course, was in the fat years but now-after the worst recession since the war, the collapse of large elements of the banking industry, a big drop in house prices, a record fall in investment and with tax rises and spending cuts being promised by all parties-the Treasury is looking to household spending contributing 2 per cent. to growth in 2011-12, and to business adding another 1 per cent. I simply ask again whether that is credible.
	Unemployment is still expected to rise to 2.8 million, and family budgets remain tight. Pay cuts, pay freezes and short-shift working are still spreading across the country. I ask again: where is growth on a sufficient scale going to come from?
	In my view, the essential element missing from the PBR is a major injection of demand in the public sector. The private sector will not provide that demand, because there is no prospect of profitability until there is a much more visible turnaround in the real economy. Quantitative easing even of £200 billion has not provided the necessary level of demand up to now, as the banks have used the money not to increase lending to struggling businesses but rather to consolidate their balance sheets. In any case, we understand that the Bank of England seems minded to call a halt to quantitative easing once gilt purchases hit £200 billion in February.
	Moreover, the injection of demand that we need will certainly not come from private consumption because, as we all know, the level of consumer debt is not far short of the whole of GDP. So the only way to inject the necessary demand into a very weak and fragile economy is through massive public investment in job creation: not £750 billion, which was spent bailing out the banks; and not £200 billion of quantitative easing, which has been much less effective than expected. A fraction of that could be used to underpin large-scale job creation in sectors where it is desperately needed, such as house building.
	There are 12,000 people in my constituency alone on the waiting list for a house, and I am sure that the situation is much the same throughout the country. House building is at its lowest ebb for 80 years, and with a recession that is an extraordinary combination. We need such investment for the restoration of our creaking infrastructure and to blaze the way for the new green and digital economy, which I think all Members agree is where the future lies.
	Why do the Government not make that investment? I suspect that it is because they came into office committed, after the Thatcherite monetarist years, to a complete repudiation of Keynesian demand management. The Opposition absolutely share that view, but I had rather higher hopes for the Government. We certainly heard that view in the speech from the Opposition Front Bencher, the hon. Member for Runnymede and Weybridge (Mr. Hammond). The story is well known, but I am embarrassed to recall that in 1997 the then Chancellor, the current Prime Minister, said that he was pursuing a regime of neo-classical endogenous growth theory. Shorn of the unfortunate terminology, it means that demand should be generated by the enhancement of supply within the economic system: from education, improvements in training, increased research and development, which is necessary, the commercialisation of science and so on. That, combined with Friedman's quantitative money theory, which was prevalent in the 1970s, certainly provided the basis for Mrs Thatcher's macro-economic policy. It is a quixotic, old-fashioned and perverse Tory theory, and regrettably-very regrettably-new Labour took it over wholesale in 1997.
	The policy works fine when other vigorous, external sources of demand such as strong export demand from other countries, major technological breakthroughs or continuing private sector investment are in place to drive the economy, as they were in the boom years of 1994 to 2007. The policy works disastrously when there are no strong external sources of demand, as there were after the infamous 1981 budget, which over the next four years pushed unemployment up to 3.2 million; and as there are now, after 2008, when unemployment is still heading towards 3 million and when even the type of fiscal expansion that in 2000 countered the downturn from the dotcom collapse is not possible because of the budget deficit. If there was ever a time for Keynesian measures to restore demand in a very fragile economy, it is now.
	The black hole in the PBR is not the opaqueness about where the cuts will fall, as the Opposition have repeatedly taunted, but the lack of any action to create the 500,000 to 1 million jobs that the economy desperately needs. Of course, the enormous budget deficit must come down; we all agree about that. But it is far better to do so by getting people off unemployment and housing benefits and back into work, where they start contributing to income tax, national insurance and VAT. The alternative, of rapidly making drastic cuts in public expenditure, clearly appears once again to be Conservative policy-but probably on a greater scale than any of us have yet realised. However, that could well have the opposite effect of turning a deep recession into a vicious spiral of decline, and prompt an even worse double-dip slump.
	That is exactly what happened in Japan in the late 1990s, when after a lost decade the Government increased public expenditure but also increased taxes. They did that prematurely and suffered the consequences of another lost decade. It was the same when Roosevelt came to office. He was a balanced-budget man, but he saw the plight of the country and got expansion going with the new deal. By 1935, two years later, there was an improvement-an expansion-in the economy, but at that point he started to raise taxes and the United States went into a fairly serious further decline from which it did not escape until the war.
	Of course, it will be objected that with the deficit as high as it is, we cannot afford to increase it any further, but that is simply not true. Our current debt-to-gross domestic product ratio is 61 per cent.-slightly higher, I agree, than that of France and Germany, but less than in the United States, where it is 69 per cent., or Italy, which is perhaps not the best example, where it is 102 per cent., with Japan still on 107 per cent.

Greg Hands: Surely the right hon. Gentleman must realise, first, that our indebtedness is rising incredibly quickly, which is in itself a cause for alarm; and secondly, that the savings rate in countries such as Italy and Japan, as opposed to our utterly anaemic domestic rate, makes that comparison a very difficult one. If we had the savings ratio of Japan or Italy, perhaps we would not be as alarmed as we all are and should be.

Michael Meacher: If we are looking at Japan and Italy, that is a perfectly fair point. The hon. Gentleman says that our indebtedness is rising quickly, and I accept that, but the question continues to be what is the best way of reducing it. The point that I was about to make-he did not give me a chance because he intervened a bit too quickly-is that the best comparison is with Britain's position during the second world war, when our debt-to-GDP ratio reached 250 per cent.-two and a half times our entire GDP. What happened after the war-did we tackle the situation with gigantic cuts in public expenditure? No, it was tackled in exactly the opposite way with large public expenditure programmes of just the kind that I am talking about to get the economy working again and to get unemployment down. I hate to say this but, in some says, that inaugurated the golden age of capitalism between 1948 and 1976.  [ Interruption. ] I say that ironically. The fact is that that was a highly successful policy.
	Let us not forget that, under the Thatcherite policies of the 1980s, we had not just one collapse, but two. It is all very well to talk about Geoffrey Howe's Budget producing a great deal of growth-it did in the end, of course, because of growth in other countries and the rise in exports, and the end of the oil inflation of the 1970s, but it then produced another collapse in the early 1990s.
	I should make it clear that I am not at all opposed to public expenditure cuts where they are justified. We should always be looking to see whether public expenditure is justified. I think-a significant number of very senior military chiefs, if not most, agree with this-that the £75 billion planned over the next 30 years for continuing with Trident is not justified. I also think that the £10 billion or so for identity cards cannot be justified on a cost-benefit rationale, and that one cannot justify expenditure running into tens of billions of pounds on massive Government Department IT super-computers, which is pretty wasteful given all the experience we have had.
	Let me say to the Conservatives, who may agree with some of what I have said, something that they may not agree with-that taxes on the wealthy should be boosted so that they pay their fair contribution at a critical time for the nation. The Government are beginning to do that, but in my book nowhere near to the degree that is justified given that the wealthy and the bankers have produced the problem and that the rest of the country are expected to pay for it. That simply cannot be justified-that is the bottom line.
	We should crack down much harder on tax evasion, which is reckoned to cost the economy something like £25 billion every year, and significantly increase the penalties for those who are caught. We should end the non-dom abuse, as it is insufferable that it has carried on for so long in this country, and we should certainly introduce a Tobin tax on financial transactions. We should raise capital gains tax to the level- dare I say it?--at which Nigel Lawson left it at the end of the 1980s of up to the 40 per cent. that is the higher rate of income tax. It is only fair that there should be a rate of 50 per cent. on incomes over £100,000 and 60 per cent. on incomes over £150,000. If the situation is as critical as many people believe, such rates are fair and equitable.
	We need public expenditure cuts where justified, tax increases where necessary but above all a massive public investment programme in job creation to swing the economy out of recession and decline and back into growth and expansion. There is no other realistic foundation for the Government's prognosis of 3.5 per cent. growth by 2011-12. I trust that the Government will make that the highlight of their last pre-election Budget in March. It would be thoroughly good for the economy and extremely popular in the country, so I ask my right hon. Friend the Financial Secretary whether we can have that assurance.

Richard Spring: I congratulate the right hon. Member for Oldham, West and Royton (Mr. Meacher), who asked exactly the right questions-how can we stimulate demand and get confidence back into the economy? We differ, however, on how to resolve it. A bloated public sector, which is already extended, is certainly not the way forward, but his central point was correct.
	There are two groups of key questions that must be asked when considering the pre-Budget report. First, what is the present and future state of the economy, is it acceptable to the capital markets and what are the threats that are facing it? Secondly, does the PBR do anything to resolve the economic mire into which we have fallen? The answers are that the economy is in a far more perilous state than the Chancellor indicated in the PBR, and that the PBR has if anything made matters worse.
	Our whole economic system is based on confidence-confidence that the currency will be stable and that what we can buy today will be the same tomorrow, confidence that a job will not be taken away and confidence that an overdraft or bank loan will be there when it is needed. That confidence keeps money flowing around the economy and keeps people in work, businesses alive and factories producing. The central question is whether the PBR has done anything to improve that confidence. Has it dealt with the real risk of a strike by the purchasers of our debt, and what would that do to our economy? Equally, has it dealt with what will happen if and when interest rates begin to rise in both nominal and real terms as quantitative easing comes to an end? Of course the £4 billion that was sold yesterday in the gilt markets for 2015 and that fact that that went well is undoubtedly good news, but investor sentiment will be tested again next week for the year 2049 and far beyond, so there is still much to be concerned about in that regard.
	At the heart of the answer to all those questions is whether the fiscal policy for the next 12 months will be credible. Our ability to borrow is the key to the market's judgment about that and will determine the outcomes in the economy, from how much and in what terms we can borrow to how much individuals can spend. The whole object of policy should be to keep the fiscal reins sufficiently restrained so that interest rates can stay as low as possible for as long as possible. That is not what we received in the PBR-it is as simple as that.
	In the PBR, the Chancellor talked about the deficit as a percentage of GDP rising to 12.6 per cent. this year. Very regrettably, that may be an underestimate. The Economist Intelligence Unit believes that the figure will be more like 14.5 per cent., by far the highest in the list of 43 countries that it monitors each week. The Government's ambition is to cut their deficit in half. When viewed in the context of any borrowing record before 1997, that makes the current forecast look unrealistic in the medium term, because it is based on some very optimistic growth assumptions. On top of that, the Treasury Committee yesterday said that
	"although the Treasury believe the Pre-Budget Report contains sufficient detail about the way in which the structural deficit would be reduced, our expert witnesses all criticised the document for not providing enough information about how this will be achieved."
	The same report expressed concern about the Chancellor's growth projections, which are fundamental.
	Why is that so fundamentally important? Owing to the huge amount of money that we have to borrow and raise each year and roll over, even relatively small changes in the interest rates offered on Government bonds could punch huge holes through our finances in future. That is the key point. That is what will make investors-at best-more cautious.
	Investor confidence in our yawning fiscal chasm remains crucial. If that fails, two things may well happen: we would have to fund the deficit through further cuts in spending or increases in taxes elsewhere, or we would regrettably find ourselves heading towards the situation that Ireland and Greece face. There is a vicious cycle of deteriorating confidence: worsening confidence leads to a further deterioration in fiscal problems, which leads in turn to a further deterioration in confidence, and so on, until we are forced to take actions that would be wholly unattractive and unacceptable to all hon. Members.
	How large are the holes that could be punched through the national finances? The Debt Management Office said that it needs to sell £225 billion of gilts this year to cover the Budget deficit, and that debts need to be rolled over. A rise in the borrowing rate, for example from 3 per cent. to 4.5 per cent., would certainly cause difficulties. As it is, the Treasury is forecasting paying more than £60 billion a year to meet interest charges on the national debt. How would the Chancellor do that? If his plans for taxation and national insurance contributions are anything to go by, he would raise taxes on jobs and undermine that very employment so as to protect unsustainable levels of spending. I hope my hon. Friends agree that it would be good if he did not get the chance to do that for electoral reasons, but there is always the risk that he will.
	That may well be the consequence of a steadfast refusal to plan for the future reduction of the deficit for the short term. In essence, that is what makes the PBR so unacceptable. The Government are refusing to publish their predictions of future interest rates costs on Government debt or say what they are likely to be. When challenged by the Treasury Committee on why that information was not provided, the Chancellor said that
	"at the best times there is a degree of uncertainty, now there is a great deal of uncertainty."
	The Government make other projections on many other key variables in the economy, but not on that most crucial one, though it is at the heart of our ability to borrow. The Chancellor confirmed that
	"within the Treasury we have estimates".
	Frankly, he should let us hear what they are.
	Many will be asking themselves what is going to happen when the Bank of England asset purchase facility stops buying gilts. The supply and demand relationships in the gilts market will alter markedly. If next year the Debt Management Office tries to sell a similar amount to the £225 billion of gilts it sold this year, what will be the price with a £200 billion buyer effectively missing from the market? David Scammell, the fund manager at Schroders, said:
	"With the Bank of England seemingly set to phase out its quantitative easing buying programme-which has seen it effectively fund the Treasury to the tune of £200 billion over the last nine months-the supply/demand imbalance will clearly tilt towards higher yields...A 'buyers-strike' would accentuate the move. This would be bad news not just for gilt investors, but also for the economy, the banks and the government".
	That is at the heart of the dilemma.
	Since the publication of the PBR, it is becoming progressively more expensive for the country to finance its deficit. The PBR failed to achieve the credibility that the markets were expecting, which is what led to the view that the Government are currently able to hold down the cost of servicing the nation's debt only because those who are buying our gilts expect a change of Government in the very near future, and a Government who inspire confidence in their competence. Frankly, after the shambles of their management of the economy in the last few years, it is hardly surprising.
	We have heard a lot about PIMCO, the important American investment group. It has said that there is an 80 per cent. chance of Britain losing its triple A rating if the Government do not move swiftly. Scott Mather, head of global portfolio management, told Dow Jones Newswires that the current debt reduction plan
	"is lacking in conviction and lacking in details".
	When asked about a downgrade, he said:
	"I think so...it's just a question of when...not if. Based on what we know today about the debt trajectory and about the inability to adjust that, I think it's greater than a 50 per cent. likelihood. Call it more like 80 per cent."
	This comes a day after PIMCO, which is the world's largest bond fund manager, decided to cut back on UK gilts-yet another buyer missing from a market where the Debt Management Office is desperately trying to sell our national debts.
	A clear measure that can be used to underline this erosion of confidence is how much someone would have to pay to insure themselves against losses suffered by holding our nation's debt. The figures are as revealing as they are shocking. As of last month, the annual cost of insuring $10 million of British debt for five years is $72,000. This is in the same league as Malaysia and Chile and $2,000 more than it costs to insure Slovakia's debt. How do we compare to countries such as France and Germany? One would hope that Britain would be in a similar fiscal position to such countries, but we compare extremely badly. It costs just $22,000 per year to insure $10 million of Germany's debt, and $24,000 to insure France's-a third of what it costs to insure ours. That is a clear judgment by outside markets on the risks caused by the fiscal situation in this country.

Greg Hands: Does my hon. Friend agree that investments in German or French bonds in the last two years have borne far less currency risk than a sterling-denominated investment, which makes our task even more difficult?

Richard Spring: My hon. Friend is right. We have had a dramatic devaluation of our currency, although I suppose it will ultimately be helpful to the recovery. The markets have made a judgment on our currency based on their view of our economy, and it is not exactly an A-plus judgment.
	Other statistics are also revealing. Not only are we a considerably less acceptable risk than other countries, but we are less creditworthy in fact than many firms and private companies. On the same basis as I mentioned a moment ago, it would cost $11,000 per year more to insure our debt than Vodafone's, $15,000 more than McDonalds', $32,000 more than BP's and an astonishing $35,000 more than Gap's. The sad fact of the matter is that the finances of large numbers of companies, in the midst of the biggest recession in living memory, are considered more creditworthy than those of the United Kingdom. That is an incredible judgment.
	The Chancellor has kept quiet on the specifics of the pain to come. That is of course simply naked politics. He steadfastly refused to go into the detail of how and where he would cut spending, or how and where he would raise more money, and therefore how, in reality, he would go about dealing with the crisis that the country faces. The IMF says that $36 billion needs to be cut from Department budgets by 2013-14 to meet the borrowing requirement.
	The few measures that the Chancellor did announce included an increase in national insurance contributions. That is a tax on jobs and affects everyone who earns as little as £20,000 a year-hardly progressive politics. That is why Richard Lambert, director general of the CBI, wrote in his editorial page in the CBI's magazine:
	"The Chancellor managed to annoy almost everybody with his Pre Budget Report. Yet despite imposing higher taxes on business, he failed to show how he would restore the public finances to health."
	He continued:
	"Put simply, the extra taxes he announced are being used mainly to support current spending for the next couple of years, rather than to reduce borrowing."
	That view can only be reinforced, because the Prime Minister has claimed that, if there is better than expected economic news in the next few years, some of the extra money could be used to sustain public spending rather than to reduce the deficit. And of course the Chancellor has disagreed with him. That is part of the problem of a disunited and dysfunctional Government.
	As the right hon. Member for Oldham, West and Royton effectively said, the key issue is what effect these policies have had on consumer confidence in the UK. According to the most recent survey by the Nationwide building society, in December consumer confidence suffered its biggest fall in more than a year. The proportion of consumers who thought that the economic situation would be better in six months fell to 34 per cent.-down from 41 per cent. the month before. The proportion of consumers who felt that now was a bad time to make a major purchase rose by 4 per cent. to 38 per cent. last month.
	Expectations for employment also worsened in December, with the proportion of people who thought that there would be many or some jobs available in six months falling to 25 per cent. from 27 per cent. Nationwide's chief economist said that although it is still early days, those lower expectations might foreshadow a more sluggish consumer outlook in 2010 as stimulus measures are withdrawn-we certainly hope that is not the case, but it does not look good. Consumer confidence, which is at the heart of our system, is one of the fundamental elements that the Government should be working to improve. It is what keeps money flowing around an economy and people in work. In that, I am afraid, they are clearly failing.
	When we look at these statistics, we have to ask ourselves whether any of this is in the least surprising given that since last year the Government have been borrowing at the fastest rate ever and the Bank of England has printed enough money to purchase the economic output of Denmark. People are crying out for somebody to show the way out of this mess. Regaining the confidence of the British people should be the job of the Government now. That is what will decisively break the country out of this vicious cycle of debt and decline. That is what will keep interest rates in this country as low as possible for as long as possible. In turn, that will help to lead to a sustainable economic recovery. We are now borrowing net nearly £500,000 per minute. It is simply not sustainable.
	I accept some of the points made by Labour Members-of course this debate might be arid, and I accept that we have to relate what we say to the reality of people's lives. Of course it is a matter of some satisfaction that, for a variety of reasons-not least the growth of the public sector, but also flexibility in the labour markets-unemployment has not reached the levels that some had forecast. Ultimately, however, we simply cannot deal with problems of employment, confidence or interests rates if we do not grasp that particular nettle-borrowing. However, that simply is not being dealt with.
	The whole picture of chaos and contradiction in this Government was truly exemplified by the Prime Minister on Sunday talking about his pursuit of aspiration-one could not make it up-while attacking the Conservatives for wanting to make cuts. Absurdly, the next day, the Chancellor, and indeed the Chief Secretary, launched a document attacking the Conservatives for excessive spending promises. One need not have graduated from a kindergarten class to know that that is completely contradictory and shows that the Government have no clue how to respond.
	When the Government leave office this year, we will have seen a decline in our international competitiveness and relative educational achievement, the longest ever recession and our international reputation in tatters. How dismissive our European partners are of a country whose tripartite regulatory system so failed us that we now have so little credibility in influencing the key area of European financial services regulation! We have been led not by Presbyterian frugality, but by the most profligate Chancellor in history. When this tired, broken-down, dysfunctional and disunited Government leave office, this PBR will simply be a milestone on the path to the electoral oblivion that they deserve.

Austin Mitchell: This opportunity to debate the pre-Budget report is an excellent innovation. It should have produced an interesting debate-indeed, a compelling one-on the state of the economy, but all that it has produced are a lot of sterile platitudes about the interests of finance, which caused the recession in the first place, through risk-taking and excessive lending, as against the concerns that we on the Labour Benches have been trying to express about jobs, employment, production and the real economy of this country.
	Nowhere was that contrast more typified than in the speech by the hon. Member for West Suffolk (Mr. Spring), who has just sat down. What he was saying, essentially, is that the problem is confidence. How do we get confidence? Only by returning a Conservative Government. How do we return a Conservative Government? By creating such a state of fear, alarm, panic, depression, horror and misery about this country's economic prospects that we just have to have one. That is a political strategy of knocking Britain and knocking our financial future. Frankly, it is damaging to the economy and to the jobs and the real people out there, and it is unworthy of the Opposition. What we should be debating is how to keep the economy going at a high level in the face of a recession that has been produced by the irresponsibility of the financial sector.
	This pre-Budget report is a difficult one, because it is difficult to predict the future, as the right hon. Member for Hitchin and Harpenden (Mr. Lilley) said. Indeed, we cannot predict the future-he went on to predict it in the gloomiest possible terms, but his essential point was that we cannot predict it. We are probably out of the recession now, in the technical sense of several quarters of negative growth, but its effects will linger on, in more closures, more unemployment and more economic difficulties. That is what we must combat. We cannot now know how long we will have to do that; therefore, it is difficult to make firm assumptions about the economic future in the pre-Budget report.
	The other problem with the pre-Budget report is that, because the Government feel obliged to look at the prospects for debt repayment and cutting the deficit, it predicts action in those areas. That has the result of moving the debate on to Conservative ground and the ground of a financial sector concerned with deficits and borrowing. However, in a recession, deficits and borrowing are not the problem; they are the solution. They are the only way of keeping the economy going at an effective level. In opposing deficits and borrowing, as they have done consistently for the past year, the Tories are preaching a system of economics that is not pre-Keynesian, but pre-Cro-Magnon.
	In my view-it is a personal view, but it is echoed by several Members who have spoken, or are yet to speak, on the Government Benches-the big problem in the economy is this. Although we have provided it with a stimulus, which has undoubtedly saved about 500,000 jobs-if we had not given the economy that stimulus, unemployment would now be at Tory levels, which they achieved twice in their period of government-that is not enough. The stimulus has to continue-indeed, we need a bigger stimulus-because that is the only way that we will get back to growth. The only way to deal with deficits and borrowing is through economic growth. With economic growth, those problems fade away.
	Let us look at the amount of debt that the incoming Labour Government paid off in the first three years of their existence, in a very powerful performance. That happened because of growth. With growth now, we can achieve the same results. That is why we must stimulate the economy to get back to the level of growth that will pay off those debts as quickly as possible. That is the crucial issue: not moaning about debt and creating imaginary threats to our credit rating to frighten the City into supporting the Conservative party financially, which is essentially what the Opposition have done, but getting back to growth as soon as possible.
	In the light of that, it is disappointing that the pre-Budget report does not envisage a stronger building performance, or a bigger spend on housing. The big expansion in housing was the main means of recovering the economy in the 1930s, before we moved on to the stimulus from rearmament. The housing drive in this country built many houses. I am sorry to say that this Government's performance on housing has been pathetic. The house-building rate is lower than it was in the 1950s; it is back at the 1920s level.

Kelvin Hopkins: I apologise to my hon. Friend for not being here for the beginning of his contribution. Does he agree that the Government would be well advised to concentrate their spending on direct job creation, and not just on reflating demand?

Austin Mitchell: Absolutely. That is why I am arguing for a big housing programme. Housing means jobs; it stimulates demand. People need to buy carpets and furniture to put in their houses, although, in the main, the stimulus benefits employment in the construction industry. The kind of housing that we need to build is public housing for rent, because that is where the demand is now. That is what the 1.8 million people on council waiting lists around the country need. They cannot afford to buy, even after the fall in prices during the past year or so. We need a big housing drive, particularly for council housing, which has been the main area of inadequacy in our performance.
	One fifth of the population have a standard of living that is not adequate. They are, in a sense, deprived, and they need public housing. We have not built enough of it, but that is the only way of providing for the future. It is also a guarantee that, when the economy begins to recover, all the money does not go into escalating house prices as it did before. If we build a strong public housing sector, people will not be forced to buy when they cannot afford to maintain a mortgage. They will not be pushed into sub-prime ownership. What they really want and need is public housing for rent, and we provided that in the past through a housing drive. We now need a bigger housing and construction drive than the pre-Budget report proposes.
	In America, a useful measure has been introduced whereby construction projects that are shovel-ready can be financed to go ahead. That is eminently sensible in a recession. In this country, 140 college building programmes were cancelled as a result of the debacle at the Learning and Skills Council. Most of those programmes were shovel-ready, including the £150 million project for the rebuilding of the Grimsby institute. That project should have been started. It would provide jobs and an economic stimulus. Why are we not doing it? The allowance for housing and construction in the pre-Budget report is inadequate. We need both in order to boost the economy, particularly in the construction industry, which is stalled everywhere.
	There is also a need in this debate on the pre-Budget report to grapple with another issue that is more basic than the deficit and borrowing-namely, the need to rebalance the economy, which has been lop-sidedly developing a huge financial sector on a shrinking manufacturing and production base. No economy can function efficiently or generate growth and jobs when it is unbalanced in that way. The process of rebalancing it will be painful, but it must be started. I had hoped that the pre-Budget report would place a greater emphasis on this matter.
	We cannot pay our way in the world now, because manufacturing has shrunk so much. It has been decimated in this country over the past few decades. It has been weakened partly by the rise to dominance-even to hegemony-of the financial sector and the City of London, under whose spell I am afraid the Government fell for far too long. The rise of the City has been damaging to the real economy of manufacturing for three reasons. The first is that the City and the financial sector would rather invest in Dubai than in Doncaster. They were never concerned with the industrial needs of this country. Secondly, the City does not exercise enough long-term thinking to support the manufacturing sector, while thirdly, of course, it always wants a high and stable exchange rate. Why? So it can manipulate money around the world to acquire assets overseas. The interests of manufacturing, however, lie in a low and competitive exchange rate, which allows more exports and the selling of products on the world markets.

Frank Dobson: Does my hon. Friend also agree that it is a remarkable irony that despite the massive growth in financial services to the disadvantage of manufacturing industry, manufacturing industry still provides a bigger proportion of our overseas earnings than the much-vaunted lot in the City?

Austin Mitchell: Over the last decade or so, manufacturing has provided an average of about 60 per cent. of our overseas earnings, but it cannot now support the economy or jobs in the way it did in the past-unless it is expanded, unless it is rebuilt and unless we shift the balance in the economy back to production and away from financial manipulation. That is our future, which will be bleak unless we do that; it will be a future of increasing debt in order to pay for imports that we are not currently paying for.
	For a couple of years our trade deficit has been higher than that of the Americans-a deficit that caused such a panic and alarm in the US. We should be alarmed and concerned about ours. All the experience of developing countries is that it is possible rapidly to develop a strong manufacturing sector if policy is focused on that by having a low and competitive exchange rate. That is what all the developing countries-starting with Germany, now finishing with China-have done. They started from a low exchange rate, which makes exporting profitable, building up a powerful internationally traded sector, which then achieves economies of scale and follows a process of continuous causation and improvement.

Kelvin Hopkins: My hon. Friend correctly emphasises the importance of manufacturing. Is it not also worrying that if manufacturing is allowed to dwindle even further, recreating the necessary skills in manufacturing will be much more difficult?

Austin Mitchell: That is absolutely true. We have networks of skills and surviving skills, which have been thrown on the scrapheap, but they could and should be mobilised for any expansion. It is true that we need a big training programme, as this is one of the bottlenecks in the expansion of manufacturing that needs to be cleared. That can be done through an industrial policy, which we have fought shy of for far too long, but which is necessary.
	As I was saying, the big expansion overseas, based on a competitive exchange rate in overseas countries, shows that manufacturing can expand and rebuild. It can do so by having a lower competitive exchange rate. We now have the opportunity for a 25 per cent. devaluation, which would make industry and investment in this country profitable again, which it has not been for the last few years. It was certainly not profitable under Thatcherism, which was based on the policy of destroying manufacturing to weaken the trade unions and the power of the country's workers. It was based on the assumption that as a phoenix rises from ashes, the more ashes created in manufacturing areas, the better would be the future of this country.
	I am afraid, I have to say, that that destructive process was continued under Labour because our concern was to fight inflation, which was done by keeping the pound high at an uncompetitive level, which subsidises imports. That also forces industry to cut its costs and shed labour in a pathetic and almost doomed attempt to stay competitive. This destruction continued and manufacturing shrank-to our shame, while we were in power-from 20 per cent. of GDP to perhaps 12 or probably 11 per cent. now in this recession. We must revive manufacturing and get it back to what it was.
	But as I look at the policies we have adopted up to now, I see that we are not effectively achieving that. We have "saved the banks", but our treatment of the banks defies belief. Whatever happened to moral hazard? The Governor of the Bank of England goes on about it, but as soon as moral hazard is affected by the banks, which were brought by their own follies and excesses into a disastrous situation, we rush in with money to pour into them. Manufacturing does not get that money. We poured money into the banks-that is a large part of the borrowing that we are arguing about-and we probably had to do so to save the banks, but nothing is going to, for instance, the steel industry in Teesside. What has gone to Vestas on the Isle of Wight, which is the country's only remaining wind turbine producer? What has gone to the manufacturing firms that are closing down and shedding labour, making people redundant? What is happening to them? We shall need their production, skills and output if there is to be any recovery of manufacturing and the economy, but we are allowing them to close down without Government support.
	The Government have poured money into the banks, and all that the banks have done with it is build up their reserves. They have not passed it on or relaxed their credit arrangements. Manufacturing is experiencing a double whammy. Money is being poured into the organisations that caused the crisis in the first place rather than into manufacturing, which has suffered the consequences, and the organisations that caused the crisis in the first place-the banks-are starving manufacturing of credit, refusing to tide it over until it can inherit the better times.
	This is a pathetic economic policy. Even the Government's policy of printing money-which is effectively what we are doing-does not really help manufacturing. What printing money does is, by buying back Government debt, buoy up the stock market and asset prices. It helps the financial sector, which holds the debt-primarily the hedge funds that have been selling that debt back to the Government at an inordinate profit to themselves-but it does nothing for manufacturing, the sector that we need to help and support.
	All the devaluations of the past-the devaluations of 1949 and 1967, the Tory devaluation of 1972-73 and the classic devaluation of 1992, when we were forced out of the exchange rate mechanism-have boosted manufacturing. Productivity and growth have increased, and the whole economy has been stimulated. We cannot let the boost that we have provided now, with a 25 per cent. devaluation, slip away as the last few prizes of devaluation slipped away. We must maintain a competitive exchange rate.
	More important, we must have an appropriate industrial policy. Exchange rate competitiveness, which means a low exchange rate, is a necessary but not sufficient condition for manufacturing revival. There has to be an industrial policy that will channel investment into manufacturing, help to see it through its difficulties, and break the bottlenecks. Whether we support planning, training, investment, research, design, development or marketing, we must help industry to move forward. We cannot wash our hands of manufacturing if we are to have a viable economy.

Stephen Timms: I am listening to my hon. Friend's speech with great interest. Like the rest of us, he will have been pleased to hear what the Engineering Employers Federation said the other day about manufacturers bringing manufacturing back to the United Kingdom, partly for the reason that he has cited-the exchange rate change-but also because of the benefits of greater reliability and better quality. Before the events of the last couple of years, engineering employers were talking of a renaissance in United Kingdom manufacturing. I think we can afford to be optimistic about the future.

Austin Mitchell: My right hon. Friend has made a valid point. I was delighted to hear the news that people who had been outsourcing-which produced a series of holes in the fabric of Britain's industrial society-are now bringing the work back to this country, partly because of the devaluation. I want that process to continue, but the Government, and my hon. Friends in general, must bear in mind that this manufacturing recovery is starting from a low and damaged base. It must go a great deal further, and must be encouraged and supported by Government, before it can produce the effects that I have described.
	We have a mountain to climb before we can again provide jobs for the people, pay our way in the world, and rebuild the manufacturing base from which innovation, productivity and national survival spring. That should have been the main message of the pre-Budget report, and because it is not, I am a little disappointed in it.

Several hon. Members: rose -

Mr. Deputy Speaker: Order. No time limit was applied to today's debate, but the average length of the speeches from the Back Benches has been about 20 minutes. On that basis, we will get only three more contributions. Speeches need to be half that length if everyone is to have an opportunity to speak. I appeal to Members to be as friendly as they can to their neighbours.

Peter Luff: I will do my best, Mr. Deputy Speaker.
	On Tuesday, the Government's flagship Bill, the Fiscal Responsibility Bill, attracted the active interest of just two Government Back Benchers-and they both opposed the Bill. I am not entirely sure that the support that the Government have received from the Back Benches today will be much more welcome. That is not to say that I disagree with everything that all those Members have said. My good friend the hon. Member for Great Grimsby (Mr. Mitchell) spoke about the importance of manufacturing. I entirely agree. Nevertheless there are ways of getting there.
	I hope that I will be present for the winding-up speeches. There are some issues about travel this evening and I apologise to Front Benchers if I am not here for their speeches. I will check my trains once I sit down.
	"There were two tests for this Pre-Budget report. First, would it increase the credibility of government plans to restore the public finances? Second, would it be a platform for job creation and economic growth? The government has failed on both counts."
	Those are not my words but those of the CBI director general speaking on the day of the pre-Budget report. It is not just big business that has spoken in that way. The Federation of Small Businesses reported that 44 per cent. of small businesses were less confident as a result of the PBR. I do not think that it has been said so far in the debate that we need to remember that the PBR bombed comprehensively on the day and calm and more careful consideration has not made it look much better.
	It is important to remember that this is a tragedy not just for the corporate sector, small, large or medium, but for thousands of individuals. The number of 16 to 24-year-olds out of work was 952,000 in the three months to October, a quarterly rise of 6,000 and the highest figure since records began in 1992. The OECD said in September that Britain now has the highest level of youth unemployment in Europe. That for me, of all the shameful failures of this Government, is perhaps the most shameful. I think that that statistic is not properly understood outside this place. I can imagine what would happen if a Conservative Government presided over youth unemployment on that scale. There would be shrieks of horror and outrage from Labour Members, who are very muted today, and tragically so.
	I am grateful to the Chairman of the Treasury Committee for his thoughtful contribution to the debate. It was measured, as was the Treasury Committee report that came out yesterday. It is important to remember that it, too, called for much greater clarity over spending reduction plans. It expressed concern about future gilt sales and highlighted fears about Britain's future credit rating. The PBR is being debated in an extremely worrying situation.
	I am fond of metaphors. I hope that this is an appropriate one. I see the Prime Minister a little like an arsonist who helped to start a blaze and then wants credit for stopping it from destroying the whole town. Stopping the blaze before it destroyed everything should not be a cause for congratulation if one is the author of the blaze itself.
	Three specific and serious mistakes by the Prime Minister when he was Chancellor, which are the background to the PBR, led directly to the recession, or at least its severity. The first was excessive spending in the good times-not mending the roof while the sun was shining. In fact, I would add that his plans added holes to the roof, funded by taxes on the bubble of finance and housing-a bubble that could never endure.
	The second problem is excessive debt, built up not just in the public sector, but in the private and corporate sectors, encouraged by the Prime Minister's false promise when he was Chancellor of an end to boom and bust. Thirdly, there was poor regulation of financial services. At least two of those factors were present in the United States of America too, but it will not do for the Prime Minister to claim that the problems that underlie the PBR have their origins in the States or the international economy. They have their origins here, too. The Prime Minister is to blame for the crisis that this country now faces. He has earned no right to be praised, as this country has been mired in the deepest recession since the 1930s and he is part of the reason for that.
	It cannot be said too often that Britain is the only G20 country officially still in recession. We might come out of recession in the current quarter, but the fact remains that this has been a huge and severe recession. It has been a personal tragedy for many thousands of our fellow citizens, and the UK has suffered a 6 per cent. cut in the size of its economy, beaten in that regard only by Japan, Italy and, I think, Germany. We have lost that for ever; as growth returns, we will still have lost that part of our economy.
	According to a construction survey, the British building industry suffered its 22nd successive monthly fall in activity in December, and employment in the contracting sector fell again last month. Many businesses still fear a double-dip recession, and consumer and business confidence is still fragile, to put it mildly. The PBR succeeded in denting consumer confidence further. Yet, for all this, the Prime Minister wants credit.
	The tragedy for our nation is that this is a pre-election PBR. At this time of great economic crisis for the nation, it would be better if we were not on the verge of an election. The PBR has become a product of electoral expediency, not economic necessity. Tragically, it has also exposed the deep divisions at the heart of Government, as well as a very unwelcome desire to create divisions and add dividing lines in politics in general at a time when we should be doing precisely the opposite.
	Yesterday, Lord Mandelson made a very thoughtful speech, which was occasionally devalued by political point scoring. In it, he said:
	"We need a politics of long-termism over short-termism; of a smarter, more effective and affordable state; of a return to the values of hard work, enterprise, corporate stewardship and mutual commitment over those of dodging responsibility, making a fast buck, and putting self before others; of working together as a nation to address the shared challenges of the future."
	I agree with that, but all we got on 9 December was short-termism by the bucket load. We got a larger, less effective, less affordable state. We got taxes on hard work and enterprise, and deliberate dividing lines designed to split us apart, not bring us together.
	Lord Mandelson was right, and the PBR was wrong. As was said in  The Guardian recently:
	"The Government remains at war with itself, with Brown, Balls and Cooper pursuing the line of 'Labour spending versus Tory cuts' and Mandelson and Darling favouring a pragmatic, deficit-slashing PBR. We can see who won. Lord Mandelson is apparently still seething with anger-'incandescent' at the outcome of the PBR."
	As my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) said in his thoughtful remarks, this Government's reaction of retreating entirely into increasing taxes rather than attacking public expenditure is the problem. The large increases in national insurance on all of us in society-including those on below-average earnings-and the 50 per cent. income tax rate are taxes on aspiration, enterprise and hard work.
	Lord Mandelson tried to justify that in his speech yesterday. He said that
	"there is never a case for punitive taxation",
	but he also said:
	"As for the new top income tax rate, I believe that is justified in the quite exceptional circumstances we face."
	What are those exceptional circumstances? As was said in the Financial Times on 11 December, the national insurance increase
	"will raise £3 billion a year from 2011, but that money is not being used to pay down the £178 billion deficit; the tax rise is needed to offset Mr. Darling's surprise decision to increase public spending by almost £15 billion in 2011 and 2012 compared with previous plans."
	As the Centre for Economics and Business Research put it:
	"If public sector wage inflation had risen at the same time as that in the private sector over the past two years, £21 billion of the national insurance and income tax rises to be introduced in April would have been unnecessary."
	These are Government decisions that are making our problems worse, not better. They are taxes on jobs, aspiration and enterprise. They may win some short-term cheers in the run-up to an election, but in the long run they will cause more pain, suffering and economic problems.
	The same is true of the bankers' bonuses tax. I loathe the scale of the bonuses, and I agree with the Chairman of the Treasury Committee, the right hon. Member for West Dunbartonshire (John McFall) on that, but not only have the measures to address that been brought forward in a technically incompetent way which caused massive confusion in the City, but they will have a negative impact on our competitiveness. We cannot duck that. We do not live in an isolated country any longer, and I do not see our chief economic competitors-the United States and Germany, for instance-following our lead on that matter.
	The scale of our debt mountain is great, and I find it incredible that Government Members are advocating still higher debt. In this week's edition of  The Economist, estimates of various countries' budget balances as a percentage of GDP for 2009 are listed. By a long chalk, Britain's is the highest, followed by the United States. Only Spain joins us in having double-digit figures. All the rest of the major industrial nations of the world, and some very minor ones as well, are running smaller budget deficits than us.
	In September-before the PBR- The Times illustrated that dramatically in a leader entitled, "Fainting by numbers". I had hoped to have the time to recite quite a few of those numbers, but bearing in mind your strictures, Mr. Deputy Speaker, I will not do so. I shall just use one. The article stated:
	"The most succinct statistic is also the scariest: by the 2013-14 financial year, government spending on welfare and on servicing the national debt will total £257.1 billion. How much does that amount to exactly? Just over £1 in every £3 that will be spent by the Government."
	In other words, these are the bills of failure. I remember what Tony Blair said when he was in opposition about what he described then as the "bills of failure". Those bills pale into insignificance by this scale; we are talking about massive borrowing and massive social security expenditure. Those bills of failure have been brought about by this Government. Richard Lambert's new year message from the CBI stated:
	"The Government has not yet established a credible path back to fiscal stability for the UK. The longer this is delayed, the greater the threat to long-term interest rates and sterling. Everyone knows that painful decisions are going to have to be made sooner or later about public spending and tax. But the timing and shape of these moves remain unclear-and that is another significant concern for business."
	I have already said that the problem is that the Government did not fix the roof when the sun was shining, and that is true-the structural deficit is alarmingly high. It is a structural deficit; it is not the product of bank bail-outs and so on. It is the problem of systemic Government failure to manage the public finances appropriately. The Institute for Fiscal Studies wrote the following on the day of the pre-Budget report:
	"The Treasury now believes that the structural budget deficit-the portion of government borrowing that cannot be explained by the temporary weakness of the economy-is 'only' 9 per cent. of national income this year, rather than the 9.8 per cent. it estimated at Budget time. This means that the underlying fiscal problem looks somewhat smaller than it did in March, although still huge by any standard."
	It is indeed huge by any standard, but I must add that that is predicated on the very optimistic forecast of a return to above-trend growth rates in two or three years' time. I do not believe that forecast; I do not think we will do that well. Thus, the problem of dealing with this situation is still worse.
	I had wanted to talk in detail about one or two specific issues, but I shall just run through them very briefly. I wished to discuss the lack of finance for manufacturing and businesses in general, but that has been done and so I shall not reiterate the point-I should just say that the situation is extremely worrying. I would have liked to talk about the comments made by those on the Liberal Front Bench about across-the-board cuts in science, but I shall not do that either.
	However, I wish briefly to mention manufacturing. I do not want to talk it down-not for a second. It is right to say that, notwithstanding the current recession, manufacturing has grown over the past 13 years under this Government, but it has shrunk massively as a proportion of gross domestic product; it has done that so much more over this period than it did under the so-called Thatcher years. The Government need to think carefully about their policies to deal with that problem and this pre-Budget report does not do that. It talks a lot about future growth, high-technology industries and low-carbon industries, but many traditional industries, for example brick making in my constituency and glass making, have been hit very hard by decisions in this PBR about alterations to the climate change agreements. We are talking about very sharp stealth taxes on traditional manufacturing industries that will lead to further manufacturing job losses in this country, the import from abroad of the products that would have been made here and carbon leakage-no gain, just loss. I urge the Government to think a bit more about traditional industries, as well as about future industries.
	I also urge the Government to examine the reasons for the failure of the automotive assistance programme, which has still not delivered a single penny to any automotive business in the United Kingdom a year after it was launched. I welcome the extension of the enterprise finance guarantee scheme, despite the cynic in me thinking that it may have something to do with the fact that the scheme has not got money out of the door quickly enough and the money is still left in the bank, so the Government are extending the period in order to use the same amount of money over a longer time.
	The one other issue that I wish to raise is that of a windfall-there is some good news-about which I know the Financial Secretary to the Treasury is aware. It comes from the digital dividend review. I am talking about the sale of the spectrum, which will result in the digital dividend. That spectrum is used largely by television, but it is also used by radio microphones, which are crucial to community halls, outside broadcasting, music, theatre and a range of interests. The Government originally promised to compensate such interests in full for evicting them from the spectrum. The cost of that eviction is about £70 million to £75 million, but it should unlock a windfall of £2 billion for the Treasury. I hope that the Government will stick to their promises, and I have received some encouraging answers from the Minister, who was wearing both of his hats this morning-operating as a Department for Business, Innovation and Skills Minister and as a Treasury Minister-to suggest that they might just do that. I hope that he will stick to that, because that £75 million is the permission to unlock a £2 billion windfall for the Government.
	We are not out of the woods yet. The international banking crisis could still get worse. Net lending to companies is still shrinking and we face huge structural problems, but I believe that they can be faced in the lifetime of the next Parliament. As Richard Lambert put it
	"the job of political and business leaders is to focus relentlessly on those policies that will enable a different and more sustainable pattern of economic growth for the future-education and skills, enterprise and innovation, competitive taxes and flexible labour markets, private sector investment, trade growth and open markets."
	Sadly, there is little sign of that in this PBR.

Derek Twigg: First, Mr. Deputy Speaker, may I apologise for the fact that I will be unable to stay for the closing speeches? It has been a pleasure to listen to the debate and some excellent speeches have been made.
	The PBR represents firm action to help secure recovery, to go for growth and to halve the deficit in four years while protecting key services, and the subject of key services and public services in general will form a major part of my speech. I believe that the PBR offers a balanced package, and the best economic approach for long-term stability. The Government are taking tough decisions to halve the deficit and to make a range of savings and efficiencies that we know, in some cases, will be very difficult indeed.
	I particularly welcome the commitment in the PBR to spending on schools and to NHS expenditure, the increase in the basic state pension and the child element of the child tax credit.
	I also want to highlight the issues to do with the tax on bank bonuses, which is very important. We should not be put off by scaremongering. Many of my constituents welcome that tax, as do most people in the country. Some people in the banks got off very lightly indeed. I also welcome the measures to do with tax evasion and tax avoidance, which are very important for fairness and will raise a significant amount of money. They will play an important role in ensuring that we get that money in and that we stop people avoiding and evading tax.
	I want to spend some time discussing the issue of employment. I was pleased to see in the PBR that £300 million will be brought forward to offer a job, training or a work placement to every 18 to 24-year-old who has been claiming jobseeker's allowance for six months. Unemployment is a great concern and many people in my constituency have suffered from the economic downturn. However, unlike the Opposition, we have not walked away from that and we are doing all we can not just through the fiscal stimulus but through the other methods that I shall come to shortly. When the Opposition were last in government, they said that unemployment was a price worth paying. We should never forget that.
	In Halton in the 1980s, almost one person in five in my constituency was unemployed. Many were pushed on to incapacity benefit. Let me give some figures that I mentioned before. For instance, in August 1985, 19.1 per cent. of the 16-to-19 age group were unemployed. In August 2009, 6.7 per cent. of that age group were unemployed. That is still obviously too many, and we have to do more, but the fact that one in five of my constituents were unemployed for many years shows the massive scale of the problems that we faced then.
	We should also not forget the record interest rate of more than 15 per cent. Rates were very high for a very long time, and many people lost their homes. We saw record levels of repossessions with no help from the Government of the time. I am pleased that we are doing more on that. We have helped people to stay in their homes and I hope that the Government will continue to do more. Of course, it is still a personal tragedy for those who lose their homes.
	I also want to welcome the improvement in support for debt counselling and advice services and access to them. The PBR provides extra money for citizens advice bureaux, which have helped many people to stay in their homes and to get their debts under some sort of control. Only this week I had a call from a constituent who thanked me for helping her by putting her in touch with the right people to get debt advice. She was then able to get an agreement with the mortgage provider and can now stay in her home. That is not untypical of what has been going on during this economic downturn.
	The stimulus has been very important in dealing with unemployment, but my right hon. Friend the Financial Secretary will not be surprised to hear that infrastructure projects are one of the big areas in providing employment and stimulus. May I remind him of the proposed new Mersey crossing? It is a £400 million project and the report of the inspector's recommendations and the inquiry that took place last year is due to land on the desk of the Secretary of State in the next few weeks. The crossing will provide hundreds of construction jobs over the next few years, if it is approved, and about 4,000 or 5,000 jobs thereafter through the economic benefits that it will bring. So, as well as improving the congestion problems in my constituency, and in Merseyside and Cheshire, it is very important for jobs. I hope that when the report lands on the Treasury's desk, the project will get the quickest approval possible.
	I want to spend a little of the short time available to me talking about public spending, which the Conservative party sees as a great evil. There have been massive improvements during Labour's time in government; Labour Government expenditure has brought great improvements throughout the country, not least in many public services in my constituency. Many people now take those services for granted, and it is worth reminding them what has happened. The greatest contrast is between hospital waiting lists now and previously, when it was common for people to wait two years or more for an operation. Those waiting times are now down to a few months or even weeks in some cases. That has been a massive turnaround. If anything shows the differences between now and previously, that change is it.
	Other benefits in my constituency are the modernisation of many schools with the provision of new buildings and sporting facilities. There have also been tremendous improvements educationally, with many great improvements in exam results. There have been improvements in transport and significant improvements in local health services and access to such services. Whiston hospital, for example, which serves many of my constituents, has received investments of £250 million. There are many private rooms in that hospital. We would like to know what the Tory promise is on private rooms, because they seem to be backtracking again. That brand-new, modern facility will serve my constituents and the wider area, replacing the Victorian buildings that the Tories always thought were okay for treating our people in. There are also improved cancer services, and more doctors and nurses.
	Let me make a point about the current weather situation and public expenditure. We should not forget the cold weather payments that are being made. The winter fuel allowance is particularly important to pensioners and the disabled. I want to make that point very clear. The free bus pass for pensioners and the disabled is another thing that is often taken for granted now, and is another example of good public expenditure.
	It is important to remind people what life was like under a Conservative Government. We have only to remember Black Wednesday and what happened to the pound then. There were record unemployment rates of more than 3 million, two recessions, long NHS waiting lists, as I have mentioned, and record numbers of repossessions. That is what life was like under a Conservative Government. Even on tax, the Conservatives' record was dodgy. It took them almost 18 years to reduce the tax burden-that was a long-held promise that they made early on in their years of power-so even they had trouble doing that. We should remind people about that.
	I believe that our approach to the economy is the right one, and that the Conservative approach lacks credibility-whatever that approach will finally be. The hon. Member for Runnymede and Weybridge (Mr. Hammond) refused to give a date for when he wanted the deficit to be halved when I asked him to do so. He was asked about that two or three times. It is clear that a Conservative Government would revert to type, would introduce massive cuts in public expenditure and would not support public services or maintain the improvements that the Labour Government have made.
	Any Government will have to make significant savings, but the speed and scale of the savings will be crucial. That is the difference between the Conservatives and us: we will continue to put whatever stimulus we can into the economy and will also improve public services. The scale of cuts could be horrendous under the Conservatives, but we do not know what the full scale would be because they are not being open and honest about what they intend to do. I believe that we have the right approach to deal with the situation.
	I also believe that the people of this country will not be fooled by what the Conservatives are saying. They know what the Conservatives are like and what will be reintroduced if they get back into power. I believe that they will stick with and trust the Labour Government, having seen Labour's good management of the economy. The economic downturn has been handled well, and we have been seen as a world leader in that regard. The downturn has been very difficult for millions of people in this country, but by having a stimulus, by improving public expenditure in certain areas and through good stewardship, we can continue to bring improvements for the future of this country, its public services and the economy.

Stewart Hosie: When the Chancellor introduced the pre-Budget report, the focus was rightly on the big deficit and big debt numbers. Those numbers included the £178 billion to be borrowed, the £1.7 trillion of national debt forecast for 2014-15 on the Treasury calculation and a share of national debt that will exceed £60,000 per household. They captured the headlines, along with the tax rises, the return of VAT to 17 per cent., and the introduction of the 50 per cent. top rate of income tax. Other headlines were devoted to the introduction of a fuel duty escalator from this spring, and to the national insurance increases for the employed, the self-employed and for employers.
	Those were the things that captured the headlines. The Government concede that their total package of measures, and the tax rises in particular, will make up about one third of the £57 billion deficit reduction that they need to make after growth, with the remaining two thirds coming from cuts.
	Labour has already announced cuts worth £800 million to the Scottish budget, but it is the cuts to UK spending Departments that will almost certainly have a huge impact across the UK and in Scotland. Those cuts have been hidden due to the lack of a comprehensive spending review, which will not now happen until after the election.
	However, the Chancellor did say many things in the PBR. He said that his task was
	"to ensure the recovery and promote long-term growth".-[ Official Report, 9 December 2009; Vol.502, c. 359.]
	Yet the PBR and its measures will do no such things, as they will apply the swingeing cuts in public investment that are to come. The Fiscal Responsibility Bill confirms the total level of the cuts, which will do nothing in the short term to secure recovery and promote longer-term growth. Quite the reverse: the cuts-dishonestly presented without a CSR-will suck the lifeblood out of the economy, and make recovery more difficult.
	I suspect that there are few people left in the House who fail to understand that it was the 2.2 per cent. increase in Government consumption that pumped some life into the economy at a time when household expenditure fell by 3.6 per cent., business investment fell by 22 per cent, and gross fixed capital formation declined by 17 per cent. I want to spend a little time on the latter point: it is not much spoken about, but it is vital.
	Gross fixed capital formation is the investment in capital assets such as the plant, machinery and technology that will be needed in the future. So where were the plans to help that grow? There were few, or none, in the PBR.
	The problem is not just with this PBR and what the Government are planning in the middle of the recession, but that the Government's track record when it comes to encouraging investment in gross fixed capital formation has been so weak. Since 1997, the UK has had the lowest average investment of any G20 OECD 12 country. Our investment has averaged 17 per cent., while the OECD G20 group has averaged over 21 per cent. For the six years between 2003 and 2008, our investment in capital formation was the lowest of any of the G20 countries. Between 1997 and 2007, only Russia spent less, and between 2001 and 2002, only Turkey invested less.
	Even in the broader list of G2O countries as a whole, only Argentina and Brazil have invested less than this Labour Government have since they came to power. Indeed, since 1997 there has not been a single year when the Prime Minister-either as Prime Minister or Chancellor-has seen a UK investment level that was not below the EU average. That demonstrates that the problem is not confined to now or this PBR, as we have had a systemic problem of under-investment in productive capacity since this Government came to office.
	Why is that important? Many hon. Members who have spoken today have said that we have to get back to inventing, developing and making things, and providing the jobs in manufacturing-of all sorts- that our people need. I agree: to paraphrase what the Chief Secretary said earlier, we need to rebalance the economy.
	This is all about jobs and, to be fair to him, the Chancellor spoke about jobs and employment a great deal in his PBR speech. He did not tell us that unemployment now is higher than it was under the Tories in 1997, when Labour came to power, and he glossed over the problem of the 943,000 youngsters who are unemployed under Labour now. That is a higher figure than when Labour came to power in 1997.
	However, those are not the key things. The key question is: what is the Chancellor's plan? The plan, it would appear, is to slash public investment too quickly and so weaken the chances of recovery. The result of that will be that tackling the deficit and the debt will be rendered more difficult, as will creating employment and jobs-especially if the heroic growth rates fail to materialise, or if we tip back into a double-dip recession. I am afraid that unemployment will keep on rising, as it did for two years after the technical end of the 1991 recession and for three years after the technical end of the 1980-81 recession.
	In the pre-Budget report, the Chancellor said that
	"we need to invest in the dynamic sectors of the future-in digital".-[ Official Report, 9 December 2009; Vol. 502, c. 359.]
	Here are some responses from those who work in the digital industry, which is vital to Dundee. Colin MacDonald, studio manager at developers Realtime Worlds, described the PBR as a "missed opportunity". Alan Mitchell, the chief executive of the local chamber of commerce, said that there were encouraging signs, but that many measures were a waste of time and that
	"there was no specific mention of the games industry."
	Dr. Richard Wilson, of TIGA, the software firms' association, said:
	"While the public finances need to be brought under control...the UK economy desperately needs to go for growth."
	But, of course, there was nothing in the PBR for the games sector in particular.

Stephen Timms: The hon. Gentleman will recognise that there was a substantial announcement of support for a centre of excellence, including for companies in Dundee. We will continue to look at the industry's case for a change to tax treatment.

Stewart Hosie: I am delighted that the case for a change in the tax regime will continue to be monitored. I am also aware of the announcement of the project in Salford.

Stephen Timms: And in Dundee.

Stewart Hosie: I shall return to the Dundee aspect.
	A great deal of public money is to be spent on that centre, but I wrote to the Minister or one of his colleagues to suggest that they needed not only to be very careful of unintended consequences, but to ensure that the vast amount of public money being invested in the new centre did not have a detrimental effect on the sector and on employment in the city. I am very well aware of the centre and the potential risks that follow it.
	The Chancellor spoke about the need to invest in the digital and other dynamic sectors of the economy, but for those at the coal face of the digital economy there was little but let-down in the PBR. The reason I cite the software and games sector is not just because it is important to Dundee, but because it is an export business; it generates revenue for the UK. In the PBR the Chancellor said that export trade had been hit hard, and boy was he right.
	We had a total trade deficit of £37 billion last year, and a colossal £93 billion deficit in the trade in goods-all that, as others have said, at a time when sterling was down massively against the dollar and the euro. As a result, GDP growth was suppressed by about 1.5 per cent., but there was nothing in the PBR specifically to stimulate export activity other than the statement's vain hope that demand from the US and the euro area might pick up.
	The Red Book suggested that GDP would be enhanced by about 0.5 per cent.-that there would be a 0.5 per cent. contribution to GDP growth from 2010 onwards. But, given that, on average, the balance of trade deficit suppressed such growth between 2000 and 2007, I hope that that is not Government wishful thinking.
	I am conscious that other people want to speak, so I shall make three final brief points. First, the Chancellor said:
	"We must continue to support the economy until recovery is established."-[ Official Report, 9 December 2009; Vol. 502, c. 359-60.]
	But on Tuesday he said that we are still in recession, yet the cuts have already been announced, so that makes no sense.
	Secondly, the Chancellor said:
	"To cut support now could wreck the recovery. That is a risk that I am not prepared to take."-[ Official Report, 9 December 2009; Vol. 502, c. 360.]
	However, the International Monetary Fund has confirmed that the UK will be the only G7 economy fully to withdraw its fiscal stimulus measures in 2010.
	Finally, on the low-carbon economy, the Chancellor said that he was determined to build on strengths today by maintaining what he called the UK's
	"leadership in the low-carbon sector".-[ Official Report, 9 December 2009; Vol. 502, c. 364.]
	However, we have heard it all before. The 2005 Budget stated:
	"The Government is...examining how it might support the development of CCS"-
	carbon capture and storage. The 2005 pre-Budget report stated:
	"Carbon capture and storage protects the environment from carbon emissions by containing them at source."
	In the 2006 Budget statement, the Chancellor said that following a joint study with the Norwegian Government, the Government were going to take measures on carbon capture and storage, and the same thing was repeated in the 2006 pre-Budget report and the 2007 Budget statement. We had one such statement after another up until early 2007, and by 23 May BP had pulled out its £500 million investment in Peterhead and taken it to Abu Dhabi because this Government could not make a decision. That shows the systemic problems that we have. There is talk about investing in digital, and then disappointment for those in the sector; talk about not withdrawing the stimulus before the recovery, and then doing precisely that; and talking a good game on the low-carbon economy, and then failing to deliver. That has been the hallmark of this Government over many years.
	At its heart-this is a tragedy, because there is a big job of work to be done to tackle the problems in the economy-the PBR was an invented political dividing line whereby the Government pretended that one party was not cutting and that another one or two parties might do so. The truth is that whether it is a Labour cut, a Liberal cut or a Tory cut, making it too early and too quickly will damage everybody's chances of recovery.

Phil Wilson: This is a general debate on the pre-Budget report, but it is a good opportunity for Members in all parts of the House to get various points across on a very important issue.
	For me, the PBR was about whose side the Government are on. I believe that the Chancellor proved in his statement that they are on the side of the people from hard-working families who were left behind in previous recessions because unemployment was seen as a price worth paying. This Government do not believe that it should be the function of financial markets to make money out of other people's misery. The PBR was about making choices and naming priorities. The Government's whole economic strategy, since the global economic crisis started in autumn 2008, has been to be on the side of the people.
	In my constituency, unemployment currently stands at 2,361. Yes, it has gone up during the recession, but it is still half what it was during the 1980s, when 5,500 people in my constituency were out of work-40 per cent. of them, or more than 2,000, for more than 12 months. Today, about 88,000 people in the north-east are out of work; in the 1990s, at the height of the recession, the figure was more than 100,000, and in the 1980s it was more than 200,000. Today, 1.5 million people are on jobseeker's allowance; in the 1980s, more than 3 million were claiming the equivalent benefit. Today, youth unemployment, if we strip out those young people who are in full-time studies, stands at 9 per cent.; in the 1990s, it was 12 per cent., and in the 1980s it was 13 per cent. Some people expected home repossessions to go through the roof; they have not, but they did in the 1990s. People thought that businesses would go to the wall more rapidly, but they have not, unlike in the 1990s. Today, 70 per cent. of people who are out of work find a job within six months, and the future jobs fund will guarantee that every 18 to 24-year-old receives training after six months. A package of £5 billion is being spent to ensure that our young people get through the downturn. Some people would not have spent that money because they believed the recession should have been allowed to take its course, but surely this initiative is underpinning the economy by helping consumption, which in itself helps to create growth.
	However, things are still tough. It was right that the Government intervened to introduce the fiscal stimulus, which has prevented the economy from entering a second great depression; the rest of the world is doing something similar. We are able to borrow money to aid the recovery because before the global economic crisis our debt levels were lower than those of a lot of our competitors. In the Fiscal Responsibility Bill, the Government have said that over four years they intend to cut the deficit by 50 per cent. from 12.6 to 5.5 per cent. They have identified billions of pounds of savings through "smarter Government" reforms. There is a new 50 per cent. tax band, an increase in national insurance, and a payroll tax on bank bonuses. Because of the fiscal stimulus measures taken by the Government, growth will also enter into the equation eventually.
	The Tories lack the political judgment that is needed in tough times. They were wrong on the recession and they are wrong on the recovery. To me, that is a fundamental dividing line between the Government and the Opposition. The Conservatives are the only main political party that aspires to government in any of the 186 states of the Iinternational Monatary Fund that actually believes the fiscal stimulus was a mistake.
	The Opposition want to do away with dividing lines, and they have started to say that the Government are using class war. That is not the right attitude to take, and in a democracy it is the wrong way to approach politics. The success of this Government is based on a broad coalition of beliefs in the country and it cuts across so-called class divides, which is why in a few months' time we will win the next election. The other reason is that my constituents are deeply concerned about what would be taken away from them if ever the Tories got into government.
	In all my years of political involvement, the only evidence of class war that I have ever experienced was the division created within, and the ultimate closure of, the communities that I grew up in by the Conservative Government during the 1980s. Communities were closed and left behind. To me, the backdrop of "Billy Elliot" is not just a west end show; it is something I lived through. I will never believe the Leader of the Opposition when he purports to be a progressive Conservative until he apologises for the callous behaviour of his predecessors. Class war should remain back in the 1980s-I actually agree with the right hon. Member for Hitchin and Harpenden (Mr. Lilley) about that.
	Since then we have had 13 years of a Labour Government, and now we have something called the "progressive Conservatives" because the Opposition know that to stand any chance of getting elected, they have to prove that they have moved on and been reincarnated into a more cuddly version of their former selves. But they have not changed. We now see dividing lines that they interpret as class war. I do not really care whether the Leader of the Opposition went to Eton; my predecessor went to Fettes college, which was seen as being the Eton of Scotland. However, I must say that as a parent I would be really disappointed if I spent all that money on my children's education and they still turned out to be Tory MPs. At least my predecessor obviously learned something.
	I understand that there are something like 15 Etonians on the Conservative Front Bench. What would they say if there were 15 Members on the Government Front Bench at any one time who had attended, let us say, Sedgefield comprehensive school or Wellfield community school in my constituency-two perfectly good schools with excellent teachers and pupils-or any other state school, for that matter? What would be the reaction of some? That it was a conspiracy and that the old school network had penetrated the highest echelons of the establishment. Surely that should not be allowed to happen.
	I want people from all backgrounds, including from all state schools, to be given the opportunity that has been the preserve of the few for so long. That is why this Government have invested so much in education and the Opposition have opposed it. Any pupil of any school should be allowed to aspire to serve in government, and the broader their experience the better. That is aspiration, and it is what the PBR is intended to underpin.
	For me, the PBR is symbolic of the Government's intent, and the Opposition's criticism of the report's fundamentals also speaks volumes. I am not surprised that they want to do away with any talk of dividing lines and are trying to say that it is about class war, because they are on the wrong side of the argument. For all their efforts, they have not changed. They are not progressive Conservatives at all-how can a person be? They can be either progressive or conservative. A progressive would have voted for the creation of the NHS; a conservative would have voted against it. A progressive would have voted in favour of the minimum wage; a conservative would have voted against it. A progressive would vote for investment in health and education; a conservative would vote against it. In this House, I am pleased to be on the side of the progressive. A progressive looks for consensus and acts accordingly. A conservative, in the country's hour of need, makes it his priority to cut tax for the 3,000 largest estates. In this recession, who is looking after the concerns of the many and who is looking after the vested interests of the few?
	I wish to say one thing about bankers and bonuses. I read a report in  The Times on 4 January stating that Deutsche Bank, which incidentally lost $10 billion during the credit crunch, wants to spread its UK tax across the pot that it holds globally because, as its chief executive officer said, it would be
	"unfair to treat the UK bankers differently".
	He wants all his bankers around the world who are due bonuses to do some of the heavy lifting. Basically, that gives us an opportunity. The Government should be acting internationally to ensure that bankers are treated the same all around the world. The problem we have is a global challenge. Economies acting in concert should consider a Tobin tax. Even if we do not have a Tobin tax, we need to create mechanisms that help to stabilise international transactions, so that financial planning is a long-term objective and transactions are not used as a means of short-term gain.
	While hundreds of thousands of our constituents pay the price for the bankers' failures, the Opposition do not think twice about filling their election coffers with millions of pounds from the City, including from Stanley Fink, the supposed godfather of hedge funds, who has given £1 million to the Tory party. In fact, on the way to half the cash raised by the Tories has come from the City. It is no wonder that one of their priorities is to cut tax for 3,000 large estates. So much for progressive conservatism.
	I want to say one last thing about how we get out of this recession and about the Tories' approach to the PBR. They basically want to create a quango rather than have Parliament oversee how we get ourselves through this time and pay down the debt in the next four years. Ultimately, that is about what kind of society we want. We want a good society, governed by smart government. The only way that we are ever going to achieve that is through this PBR and this Government acting with the people to ensure that we elect a Labour Government in a few weeks' time.

Paul Farrelly: I recognise the difficult balancing act the Chancellor faced in compiling the pre-Budget report in the most difficult economic and financial circumstances that we have faced in many years, as he will with the Budget proper. However, on fairness and taxation, I and many others believe that he has not quite got the balance right.
	Every economy will have its peaks and troughs. No Government are potent enough to abolish the economic cycle, and no Government in the free world can dictate human nature, with its swings of optimism and pessimism, and the credit cycle, which results from the expansion of banking and credit over the centuries. However, it is important that the Government recognise the dangers and weaknesses within the modern free market and act accordingly, through fiscal and monetary policy in wider economic management, and through a robust framework of regulation, and the willingness to act promptly, when the public interest demands it, in the financial markets.
	Before becoming an MP, my career was in banking and then in financial journalism. Latterly, I was the City editor of a national newspaper. From the early 1980s, I either witnessed close-up or reported in detail on each major financial and economic crisis as it unfolded, including the 1987 stock market crash, the 1990s recession, sterling's ignominious exit from the European exchange rate mechanism, the problems that engulfed the Lloyd's insurance market-the so-called LMX spiral-when nobody knew where the risks really lay, and the bail-out in the late 1990s of the massive US hedge fund Long-Term Capital Management, which happened because the Clinton Administration and, importantly, Wall Street, did not know where the liability merry-go-round would stop and how much damage could be done to the global financial system. The unique problem in my working life-it forms the context of this PBR-is the current credit crunch and global recession. In this crisis, the aspects of those other crises, save for the problem of maintaining a fixed exchange rate, have descended on us at the same time.
	History will tell, but arguably the key individual action that crystallised the credit crunch, ignoring previous lessons from the 1990s, was the Bush Administration's decision to let Lehman Brothers go to the wall. Equally arguably, the single most important policy action to contain the damage was taken first not in the United States but here in the UK-prompt and decisive action to rescue the banking system by the Chancellor and the Government. That happened not in the bankers' interests, but in the public interest. Also in the public interest, the Government responded to stimulate demand and to contain a more damaging downward economic spiral, as any intelligent reader of history would have done. That is the background against which the Chancellor delivered the PBR before Christmas.
	The key difference between this recession and the one in the 1990s is that in this one, the Government have taken positive action to ameliorate its effects-they have not simply let events take their toll on industry and ordinary families. The key difference with the 1980s is that this recession was precipitated by a massive shock to the financial system. True, it was not helped by over-lax financial regulation, with the Government, in good economic times, continuing the previous Conservative approach. But unlike the 1980s' recessions, it was not brought on by the Government themselves through ideological experiments in monetary policy as a dose of harsh medicine, a self-inflicted pain that harmed much of our manufacturing industry, especially in areas such as mine in north Staffordshire, and permanently blighted much of our economy and many of our local economies.
	Any reasonable person should welcome the individual measures in the PBR to help industry and businesses, as well as the determination not to jeopardise recovery by cutting Government spending too far or too fast. However, I would have liked the Government to go further on manufacturing. The financial crisis has delivered the sharpest lessons on the dangers of over-reliance on the financial sector and the City of London with all its short-termism. It is vital that we have a whole new emphasis on and encouragement for manufacturing. Our major competitors-Germany, France and Japan-do this. There, it would be inconceivable that only a fraction of the machinery for one of the UK's biggest renewable energy projects-the London Array-would be supplied by domestic companies. We have simply not taken enough advantage of new or existing industries.
	Anyone who had cause to go to the old Department of Trade and Industry to seek help for industry would have been dismayed by the "hands off, can't do and won't help" mentality of officialdom. That was another painful hangover, like the so-called light-touch regulation of the City, from the Thatcherite days. A whole new attitude and approach is needed. I encourage the Chancellor to take up that theme strongly when he presents the Budget proper.
	The Chair of the Select Committee has already addressed at length the City and financial regulation, including in particular the importance of getting performance incentives right-

Frank Dobson: What is my hon. Friend's response-

Mr. Deputy Speaker: Order. If the hon. Member for Newcastle-under-Lyme (Paul Farrelly) is giving way, he must not remain on his feet.

Frank Dobson: Does my hon. Friend agree that the public should be slightly daunted by the fact that no fewer than 50 of the new and improved Tory candidates actually work in the City of London and must have been involved in some of the dubious transactions that got us into the mess we are in?

Paul Farrelly: I was involved in the City myself many years ago, and I had very good reasons for leaving it. My right hon. Friend may not be surprised to learn that the City will be well represented in the constituency of Newcastle-under-Lyme during the next election, as my Conservative opponent is 27 and a City lawyer with Sullivan & Cromwell, which advised Lehman Brothers just before it collapsed. He will be close at hand on Monday, when bankers and lawyers will be emptying their wallets at the Carlton club-president, one Margaret Thatcher-for a £65 a head fundraising dinner. I have the invitation here if my right hon. Friend wishes to take it up.
	It is clear that the behaviour of City bankers has not changed, even in cases when the banks have benefited from the public purse, even given the reduced competition after the turmoil. The extra levy on banking bonuses is therefore welcome. It is only a short-term measure and it may be subject to fancy avoidance schemes, but it is important in encouraging a greater sense of responsibility in the City. I wish that the Government had done it and been tougher in action and rhetoric before. Shareholders-the major pension funds and insurance companies investing our money-should also have taken a more active stance in the past.
	In the PBR, the Chancellor also said it was important to take tough decisions on tax now. He said that he was determined that any tax increases would be guided by our values of fairness and responsibility. In a decent, civilised and progressive society, that overall philosophy is surely right. In the PBR, the Chancellor has finally recognised that a quarter of all the money spent on pension tax relief goes to the top 1.5 per cent. of earners. He will now reduce those benefits. I welcome that limited measure, but again wish that the Government had done it before.
	With respect to fairness in taxation, there is one glaring issue that this PBR, like its predecessors, does not address. That is the rate of capital gains tax which, at 18 per cent., remains lower than the basic rate of income tax and much lower than the higher rate of income tax. As such, it remains unfair: some of the lowest-paid workers will pay a higher rate on hard-earned income than many wealthy people will on unearned income. Also-this is very important-it constitutes a continuing huge incentive to tax avoidance. To eliminate that incentive, therefore, and to protect the tax base, capital gains tax should be aligned with the marginal rate of tax. I hope that the Chancellor will address that glaring anomaly in the Budget.
	We inherited that position from the Conservatives in 1997. Progressively, we reduced it under taper relief, which between 2001 and 2008 cost the Treasury an enormous amount of money-£28.1 billion. To put that into context, it is £6 billion more than the £22 billion proceeds from the 3G mobile phone licence auction, which itself reaped more for the Treasury than all previous privatisations put together. Far from taking the long view, the move has encouraged exactly the opposite: a constant churning of deals and investments. The British disease became ever more rampant, and frankly it was a huge tax break that in great part went to the City and private equity.
	I do not yet have figures for how much the change to 18 per cent. is estimated to have cost. In the future, it would be useful if the Treasury could provide them and explain why we have yet to address the glaring anomaly that I have highlighted. According to the Treasury's own figures, a rise in the marginal rate of tax would raise £2 billion for the public finances. The proposal to lift the rate of national insurance by 0.5 per cent. would raise £3 billion and mean that, however regrettably, ordinary families would share the burden. In the interests of fairness, however, it is important that the anomaly be addressed.
	In conclusion, I welcome much of what is in the PBR, but in many respects, particularly on encouragement for manufacturing and fairness in taxation, we could be much bolder. I hope that the Chancellor will address those issues in the Budget.

William Bain: The pre-Budget report safeguards vital investment in schools, hospitals and policing, and more importantly helps to create employment and training opportunities across the country as we prepare for the return of economic growth this year, after what was, in 2009, the most difficult year for the UK economy since 1922.
	No country has been insulated from the devastating effects of the collapse in the derivative markets, which has been the root cause of the recession. This has been the first global recession of a globalised financial system. However, the Government have taken strong action to recapitalise the banks and save the financial system through £850 billion in recapitalisations, loans and other guarantees. They have also shown strong leadership at a time of economic crisis.
	The Bank of England has also taken decisive action in monetary policy in maintaining interest rates at 0.5 per cent., and in my view the policy of quantitative easing has been broadly successful in injecting almost £200 billion into the economy through asset purchases. As the Japanese recession of the 1990s and early 2000s has shown, interest rate reductions on their own cannot generate a lasting recovery. On that point, I take issue with the shadow Chief Secretary, the hon. Member for Runnymede and Weybridge (Mr. Hammond). In Japan, quantitative easing was used too late and too weakly to produce a strong stimulus for recovery. To produce a strong recovery here, fiscal policy is as important as monetary policy, which is why we need to maintain an equally bold direction in fiscal policy in 2010, to make it a steady year of recovery that benefits everyone.
	The real issue dividing the House is whether that stimulus should continue this year to allow for stronger growth in 2011 or whether we should engage in fiscal retrenchment through deficit reduction now. In my view, taking the latter approach this year would be disastrous for our prospects and run the risk of a double-dip recession. I take issue with the right hon. Member for Hitchin and Harpenden (Mr. Lilley) on this point: despite her many mistakes, which generated great hardship for my constituents in the 1980s, the noble Lady Thatcher did at least not cut public spending in the immediate aftermath of a recession, which the Conservative party is proposing to do now.
	Time is marching on and the wind-up speeches are about to begin. I urge the Government to continue the fiscal stimulus this year. It is a policy that will promote much-needed employment in my constituency and those of many right hon. and hon. Members. I commend the pre-Budget report to the House.

Greg Hands: It seems like an awfully long time since the publication of the PBR for us to be debating it now. If the Government had followed the Opposition's advice and moved the start of the Christmas recess, so that it was actually closer to Christmas, we could easily have debated the PBR when it was truly tropical. Nevertheless, as we know, this debate is all about the deficit and how we secure economic recovery in this, the last G20 country still in recession.
	I will deal with the deficit and bond markets in due course. However, it is interesting that today, in the week that PIMCO, one of the world's largest bond funds, starting dumping UK Government gilts and only a few weeks after the OECD, the CBI and the Bank of England all warned that there was no proper plan in place to deal with the deficit, we have seen no response from the bunker, other than the pathetic Fiscal Responsibility Bill, which panned so badly on Tuesday. Not only is there is no plan; as I said from this Dispatch Box in October, the Government seem to be reverting to the view that there is actually no problem, returning to their position of last June, which is that there will be growth in spending after all.
	I want to digress for a moment and mention one item in the PBR that has not been mentioned today, namely the one tax cut in it, which is actually another tax con. The Chancellor has reduced bingo duty from 22 to 20 per cent., without bothering to mention that it was 15 per cent. before the last Budget. The Government claim that removing VAT offset the damage, but their sums were a mess. Even with duty at 20 per cent., bingo players today are paying more.
	Listening to the Back-Bench speakers, I noticed a curious tale from those on the Government Benches. Perhaps they thought better of it, but on Tuesday there were no Government Back-Bench speakers whatever, on the Government's flagship Fiscal Responsibility Bill. Clearly the Whips put out the call today, and the call was answered. The first three speakers were, again, mainly opponents of the Government, which I think is a sign of Labour's lurch to the left. Perhaps the Whips decided to bring them in here to prevent them from plotting.
	We heard similar themes from the right hon. Members for Holborn and St. Pancras (Frank Dobson) and for Oldham, West and Royton (Mr. Meacher) and from the hon. Member for Great Grimsby (Mr. Mitchell)-real "Back to the 1980s", old Labour socialism. We even heard an incredible and wide-ranging attack on the financial services industry as a whole from the right hon. Member for Holborn and St. Pancras, which I found remarkable coming from the man who not so long ago ran to be Mayor of London.
	We also heard from two or three other Government Back Benchers who were perhaps a little less opposed and a little less socialist. The hon. Member for Sedgefield (Phil Wilson) seemed to be rather obsessed with class and what school people had been to. I shall have to disappoint him, because, in 386 years, I am the only former pupil of the state school that I attended to become a Member of Parliament, which would seem to contradict his overall thesis that everybody on the Conservative Benches comes from Eton.
	Among Opposition speakers, we heard from my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), who made a sound attack on the Fiscal Responsibility Bill and powerfully outlined the urgent need to close the deficit, the dangers of high interest rates across the economy and the lessons to be learned from domestic and international experience. My hon. Friend the Member for West Suffolk (Mr. Spring) also eloquently outlined the challenges ahead if the Government do not get a grip on the deficit. Indeed, his insights on financial matters will be much missed in the next Parliament.
	My hon. Friend the Member for Mid-Worcestershire (Peter Luff), who has had to go back to Worcestershire, also made a good speech-a real tour de force-about the PBR, and in particular about how it affects industry. I should also mention my hon. Friend the Member for Putney (Justine Greening). She tried to get in, but there was simply too much demand to speak.
	The hon. Member for Dundee, East (Stewart Hosie), who was the only Back-Bench speaker from a party other than the two major parties, also returned our focus to the PBR and Government failings in industrial investment, and highlighted high youth unemployment.
	The hon. Member for Newcastle-under-Lyme (Paul Farrelly) made a slightly more thoughtful contribution, and we also heard a short but useful contribution from the hon. Member for Glasgow, North-East (Mr. Bain).
	To return to the deficit, the British people clearly get the message that they have over-borrowed. According to the most recent figures that I have seen, new consumer borrowing per household has fallen, from £11.11 a day in January 2008 to just 34p a day in October 2009. The equivalent figures for new Government borrowing over the same period have risen from only £3.65 to a staggering £18.44 per household per day. I applaud the efforts of the British public to get to grips with their own debt. As the shadow Chancellor said, we are all in this together. Imagine our dismay, therefore, that the good work done by the British consumer to repair his or her own balance sheet has been submerged by the explosion in Government borrowing overseen by those on the Treasury Bench.
	There is a link between consumer credit, our disastrously poor savings ratio over the past 10 years, and the all-important bond markets. The Financial Secretary to the Treasury, who is going to wind up the debate, knows that I used to work in the international fixed income markets, so he could take heed of my warnings. Official and market interest rates are currently very low, but great care will be needed in the future. Forward interest rates-the indicator of where the market thinks rates are heading-are much higher than short-term rates. In fact, the multiplier of headline long-term rates, at about eight times the level of short-term rates, could represent a historical record. It is worth remembering, as I have said before in this place, that a half per cent. increase in interest rates is far more significant when rates are low than when they are high.
	So the market is already anticipating substantial rises in interest rates. Even before any such rises have taken effect, debt interest is projected by the Treasury itself to rise from £22 billion this year to £67 billion in 2013. Obviously, the debt interest bill will rise substantially if interest rates rise significantly. That is another reason why fiscal responsibility is so important. If the Government continue to borrow uncontrollably, not only will the interest bill rise substantially, and potentially unsustainably, but the public sector will crowd the private sector out of the credit market. Members on both sides of this House rightly urge that more credit be offered to small and medium-sized enterprises, but this will be made much harder if we do not get a grip on the public finances and, at the same time, do all that we can to keep interest rates low.
	Our deficit is the worst of any major country. As I pointed out earlier in an intervention, the overall amount of debt in countries such as Italy and Japan is higher, but they have the saving grace of having a significant savings market. This country does not have such a market, due to the appalling decline in our savings ratio over the past 10 to 12 years. This is also where the public finances link in to our consumer debt problems. The crucial point is that if we divide the percentage of GDP that each country's outstanding debt represents by its domestic savings ratio, we find that we are actually in a far worse position than other countries-possibly even than Japan.
	We are already highly dependent on foreign demand, which means that we have to keep an eye on our currency strength as well as on our international credit rating. There has been a great deal of talk in recent months of credit rating downgrades and the possibility of gilt buyers' strikes. Neither of those risks should be underestimated, but another risk is that uncontrolled borrowing will lead to higher interest rates, both for the Government and for the wider economy, almost regardless of what happens to our credit rating. The market could make borrowing much more expensive than should ordinarily be the case, and the Government could end up paying large premiums for their borrowings. So whether long-term Government borrowing rates are at 4 per cent., 6 per cent. or 8 per cent. will make a huge difference to the public finances and to how much we can spend on our cherished public services.
	My hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) called for clarity and honesty from the Government, as did the Chairman of the Treasury Select Committee, the right hon. Member for West Dunbartonshire (John McFall). The biggest failure of this Government is their failure to be honest with the public, or even with themselves. Everyone knows that the deficit will require cuts to public spending, but still the Government will not reveal their plans for departmental spending.
	This fraudulent approach was displayed in all its glory by the Chief Secretary to the Treasury on Monday night in his appearance on "Newsnight". With incredulity pushed to the limit, Jeremy Paxman asked him:
	"Do you mean to say that a government which only two or three years ago was giving us public spending forecasts for the next three years will go into this election unable to tell us what will happen over the next eleven months?"
	What was the clear, honest answer from the right hon. Gentleman?
	"No, because the comprehensive spending review is about three years; that's starting in about eighteen months time."
	Having digested that, Paxman tried again:
	"So, we are going to have a budget, are we, that is not going to tell us what's going to happen to departmental spending?"
	This time, there was an admission from the right hon. Gentleman:
	"I think that is possible."
	What a shoddy excuse for a Government!
	In conclusion, the facts are these. In 1997, Labour inherited an economy in very good shape, characterised by low national debt, flexible labour markets and strong private pensions. All three of those areas have been gravely degraded.
	I end with this thought. When it comes to spending and the deficit, the Government are behaving like a set of habitual drinkers, gathered around a table in a dingy pub as chucking-out time approaches. Everyone else in town, even those in the pub, can see that it is time for them to be slung out, but they are discussing going for one last binge. The way to avoid the hangover, they say, is to carry on drinking to the end. The worst offender is the boss himself, sat there with his two mates. Suddenly, the slightly more responsible Chancellor, who is actually the designated driver, weakly suggests that it might be time to stop. Heated discussion ensues: the Chancellor suggests that it is time for the boss to give up entirely, but suddenly, the boss's best mate of all returns from the bar clutching two bottles of whisky. Last orders are approaching for these people. The binge needs to end, the Government need to sober up and the whole country can see that it is time urgently to change course.

Stephen Timms: We have had a good debate. My right hon. Friend the Chancellor delivered the 2009 pre-Budget report after a very difficult period for the world economy. As we see signs of recovery, new confidence has been achieved through co-ordinated action by Governments and central banks around the world, co-ordinated successfully through the UK presidency of the G20. Britain's Prime Minister deserves enormous credit for that achievement.
	What we can now do is compare the effect on jobs and families of the recessions of the 1980s and '90s-home-grown problems those, as my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) pointed out, not worldwide ones-with the recession that we have just been through. Those comparisons are made in the Treasury Select Committee report before us and they were also made by a number of contributors to the debate, including my right hon. Friend the Member for Holborn and St. Pancras (Frank Dobson), who rightly set out in sombre terms the consequences of some of the policies urged by Conservative party supporters.
	In the 1990s, home repossessions reached 75,000 a year. The Council of Mortgage Lenders forecast 75,000 repossessions again in 2009. A few weeks ago, it cut that estimate by more than a third because the policy of protecting home owners through the recession has worked. The alternative policy urged upon us-of letting the recession take its course-would have led to far more repossessions, such as we saw in the 1990s.
	In both the 1980s and 1990s recessions, the number claiming unemployment benefit reached 3 million. Many of us remember all too well the damage to our communities that resulted. We heard about that in the excellent speeches by my hon. Friends the Members for Halton (Derek Twigg) and for Sedgefield (Phil Wilson). Today, the number is just over half that-less than 1.7 million. In the most recent figures, it went down. The increase in unemployment has been half of what was forecast. Our policies of supporting the economy and supporting jobs have been working.
	Let me say to Conservative Members that the right hon. Member for Hitchin and Harpenden (Mr. Lilley), in an interesting speech, really let the cat out of the bag. The policies urged upon us by the Conservative Front-Bench team are exactly the policies applied by the Tory Government in the 1980s. The difference between us is whether those policies were successful or not. The right hon. Member for Hitchin and Harpenden clearly takes the view that that was a successful experience of management of the economy, but I have to tell him that that is not the country's view. As my hon. Friends have said, the realities of that experience should be taken to heart by Conservative Members.
	We have not seen in this recession the big increases in long-term unemployment that were so damaging in the 1980s and 1990s, or the big rise in the number receiving sickness benefits, which was in some ways the worst aspect of the 1980s recession, when jobcentres were incentivised to move people from unemployment benefit on to sickness benefit. Quite a lot of those people who went on to sickness benefit in the 1980s never worked again. We are still paying the price for the way in which that recession was managed by the Tory Government. As we have heard, businesses are failing at about half the rate that we saw in the earlier recessions. To put it bluntly, Labour policies have worked a great deal better than Tory policies did.
	The pre-Budget report, however, did not look back; it looked forward. Big challenges remain in the world economy, and our challenge now is to secure the recovery. That is why, in the pre-Budget report, my right hon. Friend the Chancellor decided to continue support for the economy now, which is what we should be doing. My hon. Friend the Member for Glasgow, North-East (Mr. Bain) was right to underline that point. We must continue to invest in services on which people rely, and in industries that will support our future.
	The pre-Budget report also spelt out our commitment to halving the deficit over four years. The shadow Chief Secretary, the hon. Member for Runnymede and Weybridge (Mr. Hammond), appeared to edge towards agreeing that that was the right period in which to tackle the task-which would constitute a striking U-turn, given all the U-turns, forwards and then backwards, that the Conservatives have performed this week. The Conservatives have demanded greater detail from the Government, but we still have not heard their target for the deficit.
	The hon. Member for Twickenham (Dr. Cable) made a characteristically thoughtful speech. He was right to spell out the dangers of precipitate spending cuts, and I welcomed his assessment of the PBR stance, which I think he described as reasonable. He asked whether the bank bonus tax should be made permanent. My answer is no, it should not. It is a one-off measure. For the long term, we shall have the Financial Services Bill and the G20 rules on bankers' remuneration.
	The Chairman of the Select Committee, my right hon. Friend the Member for West Dunbartonshire (John McFall), spoke of the importance of keeping an eye on the problem of child poverty. We announced in the PBR that households receiving full tax credits and with incomes up to around £16,000 a year would qualify for free school meals for children of primary school age. That will boost the incentive for parents to obtain work and will reduce child poverty. The Select Committee was right to underline the continuing importance of our goals in that regard.
	As my right hon. Friend the Chancellor has observed on numerous occasions, support in the downturn goes hand in hand with steps to rebuild our fiscal strength once recovery is firmly established. The right hon. Member for Hitchin and Harpenden suggested that the pre-Budget report had not had much to say about that. He was entirely wrong. Across the world, countries are borrowing more. Stabilising the banking system and supporting the economy impose costs, although those costs will be much lower in the long run than they would be if we decided to let the recession run its course. Now, support during the downturn needs to be followed by steps to restore the public finances once recovery is established.
	We have set out clear goals for the consolidation. We have specified in the pre-Budget report how much we expect to spend in each year up to 2014-15 and how much we expect to receive in tax payments in each of those years, given the tax measures that we have announced and published. As a result, the deficit will fall to 5.5 per cent. of GDP by the end of that period, less than half the current level. Given further consolidation thereafter, debt as a share of GDP is projected to fall in 2015-16. To secure consolidation, the pre-Budget report announces tax rises for those with the greatest ability to pay, while ensuring that those on the lowest incomes will be protected.
	The pre-Budget report was right to support the economy in the way that it did and we were right to support the economy during the downturn, but now, as the economy starts to emerge from the crisis, we must not think that the job is finished. We have a great deal more to do over the next few years. The pre-Budget report set out actions to secure the recovery, to restore the public finances as we must, and to build our future. I commend it to the House.
	 Question put and agreed to.
	 Resolved,
	That this House has considered the matter of the Pre-Budget Report.

UMBILICAL CORD BLOOD

Motion made, and Question proposed, That this House do now adjourn. -(Lyn Brown.)

David Burrowes: It is a great pleasure to have secured this Adjournment debate. I think that I was the first Member to raise the issue of umbilical cord blood as a private Member's Bill, and subsequently I raised it with other hon. Members during the passage of the Human Fertilisation and Embryology Act 2008. Courtesy no doubt of Google word searches, my interest has led to a number of academics contacting me about their research into cord blood. I imagine that this debate will keep me at the top of the umbilical cord blood search page. However, my concern is to increase the understanding and application of cord blood.
	After I first raised the issue, several hon. Members spoke to me of their previous ignorance of umbilical cord blood. It is an ignorance that I shared, despite being a parent of six children and living close to one of the NHS hospitals that collects umbilical cord blood.
	Like the majority of parents in Britain, my wife and I thought that the umbilical cord once clamped was simply a waste product. We were totally unaware of the potential benefits of donating our children's umbilical cord blood. My understanding has grown over the years, aided by some excellent individuals in the charitable, private and public sectors who are passionate about cord blood. I pay tribute and thank the Anthony Nolan Trust and UK cord blood working group for their work and assistance and for rubbing off some of their passion on me. What inspires me to keep flying the flag for umbilical cord blood is meeting those children who are alive because of cord blood. This is a subject that can be literally a matter of life and death.
	Patients in the UK requiring a bone marrow donor currently have a one in four chance of survival. Only 50 per cent. of those looking for a donor will find one, and of those only 50 per cent. will survive. For those who find a bone marrow donor, many get their donor too late in their disease for the treatment to achieve success and that contributes to the 50 per cent. failure rate. Greater provision of cord blood could help those patients to get treatment faster and improve their chances of survival. For those who currently have no bone marrow donor, a larger provision of cord blood would give many of them a potentially life-saving option.
	Despite an increase in the awareness of those reading or listening to this debate, I feel that a short explanation of umbilical cord blood is in order. The baby's blood which is left behind in the umbilical cord contains many different types of cells. Some of these cells are stem cells, which have been shown to have a number of medical applications. Over the past 20 years, collected cord blood has been used for transplantation in the same way as bone marrow. It has been used to treat patients suffering from diseases such as leukaemia, sickle-cell diseases, immune deficiencies and others. Currently, there are over 85 treatments based on cord blood and there are more clinical trials in the pipeline.
	Researchers believe that cord blood has the potential to treat many more diseases, once adult stem cells are properly understood. There have been trials that show that cord blood may be helpful in treating brain injuries in children. It is also being developed for other possible treatments such as diabetes, liver therapy, multiple sclerosis, testicular cancer and to regenerate damaged heart cells. The medical and financial value of cord blood should not be underestimated. Early indications from research conducted in the UK suggests that many of the patients currently receiving enzyme treatments at a cost of well over £100,000 per annum to the taxpayer, could find a cure through a cord blood transplant.
	Cord blood is particularly valuable in the treatment of leukaemia. It can be used as an alternative to bone marrow transplants. Collection of umbilical cord blood is a far less invasive procedure than extracting bone marrow. Units can be collected, frozen and then stored for years. That leads to fewer complications and makes transplants more readily available than bone marrow. Most importantly, it is easier to find matching stem cells from cord blood than from bone marrow. A properly developed infrastructure for the collection and storage of cord blood will do much to alleviate the severe shortage of life-saving stem cells needed for transplantation and to facilitate research.
	Cord blood is a natural, safe, ethical and sustainable resource. It offers many advantages over using traditional bone marrow transplants from adult donors and would offer researchers an alternative to using embryonic stem cells.
	The previous time cord blood was debated in the House was during the passage of the HFE Act in the context of allowing so-called saviour siblings. I took part in the debate, and an irony was revealed in it: the contrast between the Government stretching ethical boundaries to accommodate so-called saviour siblings, but restricting the natural, safe, ethical and sustainable life-saving resource of cord blood, with 99.5 per cent. of umbilical cords thrown away.
	However, it is important to be charitable, and over the years there has been success and progress in the field of cord blood. The NHS was one of the first bodies to recognise the potential importance of cord blood, and some of the most important breakthroughs were made here in Britain. The NHS cord blood bank was established in 1996, and at the time it was one of only a handful in the world. Last year, the fifth umbilical cord blood collection facility, at St George's hospital in Tooting, was opened. The NHS CBB has moved into a state-of-the-art facility in Filton, which provides greater capacity and the flexibility to meet future clinical standards. I have visited one of the collection hospitals at Barnet, near my constituency, and I was impressed by the professional service, with all donations collected ex utero in a separate room so that the focus remains upon the care of the mother and baby.
	As of October 2009, the NHS CBB had banked approximately 14,000 donations and provided 279 units of cord blood to British patients, with 34 per cent. coming from black and minority ethnic communities. Given that there is only a 30 to 40 per cent. chance of a BME patient finding a matched unrelated donor, it is right that there is a focus on increasing cord collection within these communities.
	However, this progress has not gone far enough. The vast majority of parents in this country do not have access to NHS umbilical cord blood collection centres, which are in London, Luton and Watford. Expecting parents are not being informed about the many benefits of donating their baby's cord blood. Even parents who have a history of blood-related disorders are not properly informed and have limited options to have their cord blood collected. Last year, an Enfield resident whose family had suffered from a rare anaemic disease contacted me in a desperate state. Her daughter was due to give birth any day and she had only just discovered by chance the value of collecting the cord blood. Fortunately, they lived near Barnet hospital, which collects cord blood, but only then at certain times; they were told that unless the birth happened between 9 and 5, Monday to Thursday, the collection would not take place. Therefore, even if someone is fortunate enough to live near one of the five NHS collection hospitals, and even if they are fortunate enough to be fully informed about the potential life-saving value of cord blood to their child if they are at risk of developing a family blood-related disorder, the cord blood may still be thrown in the bin.
	At a time when the health service is so mindful of the need fully to inform patients about their health care, the issue of the collection of a mother-baby's cord blood does not seem to get the same level of attention. The principles of full information and consent do not seem to apply to cord blood, which is generally treated as a waste product, unbeknown to the parent apart from in exceptional circumstances.
	These circumstances of collection are more often dictated by the NHS collection targets than the wishes of the parents. It is hardly surprising that private companies come in to fill the void. Competition and tight regulation by the Human Tissue Authority have ensured that good practice predominates, but at a financial cost to parents. Private banking has its place, but what is lacking is access to sufficient cords available for public benefit from whatever source.
	In previous debates, I have said that the NHS bank of 14,000 blood cord units is too low. Last year, academic research confirmed that for a truly effective transplantation infrastructure to operate in a country of the UK's size and population, we will need to bank about 50,000 units of cord blood, and some people think the bar should be raised even higher. Either way, there is an urgent need for a sound projection of what is required, which should form the foundation of a comprehensive strategy for cord blood in the UK.
	At present, many patients-particularly those from ethnic minorities-who need transplants are unable to find matches. That has resulted in the NHS importing cords from the continent. The Anthony Nolan Trust has responded by collecting cords at King's College hospital, and has plans to extend this to 10 collection centres in maternity units around the country. At the request of the Government, a funding bid was submitted last June. The cord blood working group is also putting together the clinical and economic case for expansion. Will the Minister give a view on the progress of these plans?
	The UK is falling behind our European neighbours and other developed countries. Our NHS cord blood bank is smaller than those of countries of a similar size, such as France. Greater attention and resources are paid to this issue in other countries such as Spain, Italy, Germany and the United States. At present, cord blood can be used only to treat a fairly narrow set of illnesses, but scientists believe that with more research and investment it could be used to treat a much wider range of illnesses. Research in this important area has been hindered by lack of public awareness and by embryonic research crowding out other forms of research into stem cells. As a result, leading figures in this field such as Professor McGuckin and Dr. Forraz have left the UK to pursue their research in other countries that are more open to the possibilities offered by cord blood research.
	A key difficulty with cord blood transplants is the problem of engraftment where the body rejects the transplants, particularly in adolescents and adults. Until recently, UK transplanters have tended to opt for other established treatments because the reported results of cord blood usage have not been as promising. Indeed, I received news today of a health commissioner asking for a business case to be made for a prospective cord blood transplant-perhaps the Minister would comment on this worrying case.
	However, recent overseas advances in the use of cord blood and the launch last month of the first UK clinical trials of cord blood have greatly encouraged clinicians. At the instigation and under the management of Dr. Rachael Hough of University college London hospital, two clinical trials are running across the UK. The aim is to establish the safety and efficacy of using unrelated cord blood to bridge the engraftment problem, and to establish conditioning protocols. For example, it may be that by increasing the amount of cord blood stem cells-given the unique mobility involved-unrelated cord blood can provide safer and more effective life-saving treatments.
	The scientific development and application of cord blood in other countries has reached a point where it would be neglectful for the UK not to embrace to the full this exciting option. It is becoming clear that having a large range of cord blood donations available for patients to find compatible transplants would save both lives and money. It is not just the Government who need to keep up with progress in the field of umbilical cord blood; the Royal College of Obstetricians and Gynaecologists' last word on this was a 2006 report in reaction to perceived problems with some private operators, but the umbilical cord blood world in the public, charitable and private sector has made significant advances since then.
	To its credit, the Department of Health agreed to undertake a review of the collection and use of umbilical cord blood, and seminars and discussions have taken place. However, the progress of the review has been very slow. In October 2008, I asked the Secretary of State when the conclusions of these studies would be published. I was assured by the relevant Minister that the report would be made available later that year. When that did not occur, I asked the same question again-this time in March 2009-and the relevant Minister replied that these conclusions would be published in due course. It is now January 2010-happy new year-and the Department of Health has still to publish its findings.
	It is not sufficient for the Minister simply to rely on the report published by the consultant Technopolis. Indeed that report made the point when it concluded:
	"No explicit national policy has been formulated on cord blood banking in the UK, either as part of health or science policy or as part of blood bank policy."
	It went on to say:
	"We recommend that the UK...consider... Creating a high-level advisory committee to provide the Minister and policy teams with advice on the detail of such a policy."
	What is the Government's response to this recommendation and progress on it? I hope that we will hear something of the Government's conclusions from their review but will the Minister at least accept the long-standing invitation to speak to the all-party group on umbilical cord blood and adult stem cells, which I have the privilege of chairing?
	May I also ask the Government to provide regular updates on how many units of cord blood have been collected, stored and transplanted in the UK? The Government must make their views clearly known. Do they recognise the need to collect 50,000 units of cord blood? Does the Minister have a view on plans to increase numbers of blood cord transplants? I hope the Government will demonstrate a clear commitment to funding cord blood research and to the many lives that it could save.
	In September 2008, the then Health Secretary opened the Anthony Nolan Trust's excellent storage facility for cord blood with a stem cell research centre in Nottingham. He called it a "crucial development" and went on to say that there was a
	"wonderful opportunity to take advantage of"
	in terms of cord blood. There is an opportunity for more lives to be saved, for valuable scientific research to be undertaken and for the UK to become a centre for excellence in cord blood. Two people die every day waiting for a stem cell transplant and 65,000 litres of cord blood are discarded every year. Will the Minister assure the House today that the Government are taking advantage of the wonderful opportunity offered by cord blood rather than, as seems to be the case, literally throwing it away?

Gillian Merron: I congratulate the hon. Member for Enfield, Southgate (Mr. Burrowes) on securing this debate. I well know of his interest in this matter as chair of the all-party group and I look forward to taking up the invitation that he has generously extended to me. I understand his passion about and interest in the subject and I have come to share them as I have become more familiar with it.
	This is a very interesting and extremely exciting time for the people who stand to benefit from the possibilities held out by improving science and clinical practice. New approaches to stem cell transplantation hold out fresh hope for patients with leukaemia and other blood disorders and, of course, cord blood is becoming an increasingly important source of stem cells, particularly for those with rare tissue types not served by the bone marrow register.
	Our knowledge of the potential of cord blood is growing year on year as a result of the Government's investment in research and our commitment to supporting those who seek to find new answers for those who seek transplants and, because of this, the use of cord blood is increasing in terms of numbers and is broadening in scope. For example, it is likely that more adults than children will receive cord blood treatments this year for the first time, just one sign of how these treatments are evolving in use. I agree absolutely with the hon. Gentleman: cord blood can play an important role in treating blood disorders and cancers in the future and we want to be in a strong position to take advantage of these breakthroughs.
	I know that the efficient and co-ordinated collection and storage of cord blood are crucial to that ambition and change. Our NHS cord blood bank is a world leader, holding the second largest inventory of unique tissue types in the world, and it is the world's fourth largest bank. As we have heard today, the bank will shortly be entirely based at the new £60 million blood processing facility in Filton, Bristol, which will be the largest facility of its kind in the world. Our current focus is on collecting from groups that are under-represented on the bone marrow register, because this is where we believe cord blood can make the most immediate and biggest contribution by extending new hope and providing life-saving treatment to those who have difficulty finding an appropriate tissue match.
	In England, we now have five NHS hospitals that can collect cord blood, all chosen because they serve families from a diverse multicultural mix, as was correctly pointed out by the hon. Gentleman. In October, I had the pleasure of opening the newest site at St. George's hospital in Tooting. While I was there, I was lucky enough to witness the collection of a cord blood unit. My officials told me that I could not have chosen a better time, as a woman had conveniently just given birth, and she donated cord blood while I was there. I was struck by how such a simple procedure could provide such a valuable resource, and it left me absolutely determined to promote cord blood collection and use.
	We have taken massive strides forward in recent years, but I am conscious that there is more to do. That is why we have agreed to provide a further £10 million to increase the size of the cord blood bank to 20,000 stored units by 2013. That reflects our commitment to support cord blood treatments into the future.

David Burrowes: Will the Minister give way?

Gillian Merron: In a moment. I have listened carefully to the hon. Gentleman's arguments about the need for a larger bank. I understand his points, and I will keep an open mind on whether further expansion may be necessary. Before I take his intervention, though, I want to add that the issue goes even deeper, because we cannot settle on an optimal size for the bank until we have a clear view of how cord blood fits within the whole landscape of stem cell transplantation.

David Burrowes: Those comments help with my question. Is it not the case that we need a comprehensive strategy to deal with all aspects of collection, storage, use and transplantation? We need to consider those issues and come to a settled view on what should be the optimal level, which might well be more than 20,000 units. I should like to know whether the door is open to consider the established academic figure of 50,000 or more.

Gillian Merron: Perhaps if the hon. Gentleman allows me to continue a little, he will be pleased with some of my comments about how we should move forward. I hope that the all-party group will be part of that moving forward.
	The hon. Gentleman argued that we should move towards the routine collection of cord blood. Again, I understand the point about widening the range of collection, but there is not a strong call for that approach from the research or medical communities.

David Burrowes: Let me clear up this point. I have called not for routine collection but for the routine provision of information. It should be a matter of routine that all expectant parents are advised about cord blood, its value and benefits, and where it can be collected.

Gillian Merron: I thank the hon. Gentleman for that clarification, and I understand his point, but we need to give routine information that is linked to a whole approach to dealing with cord blood collection. Our priority has to be a focus on quality rather than quantity. That means finding good matches to treat those with rare tissue types.
	If we want to go further in utilising the benefits of cord blood, we need to understand how it best complements other sources of stem cell transplants, most notably bone marrow. We have to decide what the future of stem cell transplantation should look like, and what resources we will need to support it. Only when we have that can we make an informed decision on the size and scope of the NHS cord blood bank. I know that the hon. Gentleman is concerned about that.
	The hon. Gentleman mentioned the Technopolis report on cord blood that the Department of Health commissioned in 2008. That report was an important starting point, and I am happy to support many of its recommendations. Since its publication, departmental officials have been in lengthy discussions with NHS Blood and Transplant, the Anthony Nolan Trust and other players to take forward many aspects of the review. We are now working closely with the recently established umbilical cord blood transplant working group, and I believe that that will give us real insight into what is really holding back cord blood collection and use. It will delve into the practicalities of improving clinical awareness and the need for better patient information, which the hon. Gentleman has called for. It will also help us to understand where the latest research may take us in future.
	The key recommendation that came out of the Technopolis report was the need for a national strategy on cord blood. As I have said, we cannot approach the issue of cord blood transplantation in isolation. We have to think about how bone marrow and cord blood collection can complement each other and about the challenges facing us, now and in future, in relation to those sources of stem cells. We also need to define the role for all key partners, and start to bring together the various systems and structures that support stem cell transplantation to ensure even closer working. There are, of course, many different interest groups involved and I want to be absolutely sure that their views are fully represented as we take things forward, but we all have the same, singular objective-to help save more lives.
	That is what this work is really about. We can discuss bank size, the pros and cons of one system over another or who is best at doing what-and those are all important discussions and decisions that we have to make-but all that really matters is whether we can make the difference between a person living or dying. We have to make choices that will make the biggest difference to those patients so, for me, that is what will drive our work in the future.
	I am sure that the hon. Gentleman will be delighted, therefore, when I tell the House that we are establishing an expert strategic forum that will be led by NHS Blood and Transplant, in partnership with the Department of Health and other stakeholders. This group will operate as a high-level taskforce to advise Ministers on the best options going forward, and that will mean getting to the heart of many of the issues that he quite rightly raised today in the House.
	I shall also write to my ministerial counterparts in the devolved Administrations to ask if they will be represented, so that we can get strong dialogue and co-operation across borders. My intention is for this group to produce a discussion paper in the spring of this year that will provide the basis for a new strategy on the collection and use of stem cells for transplant.
	In conclusion, like the hon. Gentleman I am extremely enthusiastic about the role that cord blood can play in the future. The reason is simple-it saves lives. It holds out the possibility of saving people who would otherwise die because of a lack of matched tissue.
	We have to make the right strategic decisions for the future, based on real expert insight into how stem cell technology is evolving and on what will deliver the very best results for patients. I am confident that the new forum, drawing on the work of the cord blood working group, will help to guide us to the right answers.

David Burrowes: Do we not need some form of mechanism, as well as the regular reports, for making information available-for instance, about the number of units of cord blood that have been collected or are in storage or used in transplants? That information is important, because it will allow us to see the progress being made and to make adequate responses.

Gillian Merron: I shall be very happy to make that information available, as it will of course assist us as we move forward.
	We have a strong heritage in this area or work, having pioneered bone marrow transplants in the 1970s and 1980s. As science opens up new possibilities, I am determined that we maintain that tradition, because we are well placed to take advantage of the great promise that cord blood-indeed, that all forms of stem cell transplantation-can offer patients.

David Burrowes: I thank the Minister for giving way one last time, but I want to use all the time available for this important subject. She will be aware of the proposals put forward last June-with Government encouragement, I understand-from the Anthony Nolan Trust, and she has already referred to the work of the core blood working group to develop an economic case. How do those proposals fit into the timeline of the April date that she gave?

Gillian Merron: By way of clarification to the House, I should say that I referred to the spring because I want to make sure that the work is done properly, but my intention is that the work will be done sooner rather than later in the year ahead. The hon. Gentleman's comments can of course be read into the review, and I shall be very happy to discuss this matter in even greater detail at the all-party group, whose meeting I look forward to attending.
	I thank the hon. Gentleman for raising what I believe is a very important matter, and for his commitment to taking it forward.
	 Question put and agreed to.
	 House adjourned.